The age of renewables is upon us, Citi says.

In a new note titled "The Age of Renewables is Beginning – A Levelized Cost of Energy (LCOE)," Perspective, Citi's alternative energy team led by Shar Pourreza, writes that we can expect across-the-board price decreases in solar and wind, which will continue to fuel the renewable energy generation boom.

Renewables energy, primarily solar and wind, costs continue to decline and are increasingly competitive with natural gas peakers (natgas plants that turn on during periods of high demand — ed.) and CCGT (combined cycle gas turbine) plants on an LCOE (the lifecycle cost of an electricity generation system — ed.) basis.

Here are the projected cost decreases for solar:

Solar PV module cost declines thanks to Moore's law — " Our outlook is for module costs to decline approximately 11% per year over the next five years driven primarily by lower cost of production," Citi says.

Balance of System — components of a photovoltaic system other than the photovoltaic panels — price declines thanks to streamlining and standardizing the installation process. " We apply an annual discount of 6% to residential scale BoS costs, and an annual reduction of 8% to utility-scale BoS costs, which we think are very conservative given recent rapid cost reductions," Citi says.

Polysilicon price declines, which should track reduction rates in other parts of the panels.

Lower conversion factors and higher efficiencies (fewer grams/watts needed to produce panels).

Longer module life spans.

Citi adds the caveat that the rates of price declines vary among residential, commercial, and utility-scale projects, but that the overall downward trend holds.

Price declines will also be seen in wind, thanks to:

Larger and therefore more efficient turbines ( turbines that are over 100MW are ~11% cheaper on a $/MW basis than turbines that are less than 100MW).

More investment, thanks to cheaper financing.

Here's Citi's wind outlook:

Meanwhile, natural gas prices are going to keep going up — Citi's "long-term" (exact dates aren't specified) gas price forecast is $5.50/mmbtu. And the cost of running coal and nuclear plants is slowly becoming prohibitive.

In conclusion:

In peak power generation, solar is increasingly attractive vs. gas peakers from an LCOE and fuel diversity perspective. In baseload generation, wind, biomass, geothermal, and hydro are becoming more attractive vs. CCGT plants but other considerations influence adoption of renewables.

Citi is in fact bullish on certain publicly traded utilities that have most nimbly adapted to the renewables boom, including Edison International and Pacific Gas and Electric in California; Duke Energy in the South, DTE Energy in Michigan, and Westar Energy in Kansas. They also like SunEdison, SunPower, and First Solar. They have not initiated coverage on SolarCity.