(Corrects name to Ondrich in paragraph 21)
* Says impossible to invest without state guarantee
* Investment also difficult due to low power prices
* Deal was seen valued at $10-15 billion
* CEZ shares rise, room seen for dividend increase
By Jan Lopatka
PRAGUE, April 10 (Reuters) - Czech utility CEZ cancelled a tender to expand the Temelin nuclear plant on Thursday, halting a potential $15 billion project citing low wholesale power prices and the government's refusal to provide price guarantees.
CEZ had long argued that building two 1,200 megawatt reactors was not feasible without government support, a prospect which grew less likely after a centre-left government took power in January.
CEZ shares rose 3.1 percent to 563 crowns following the news.
"While originally the project was fully economically feasible given the market price of electricity and other factors, today all investments into power plants, which depend for revenues on sales of electricity in the free market, are threatened," CEZ Chief Executive Daniel Benes said in a statement.
"In the future it will be necessary to cooperate closely with the state in order to secure further development of nuclear energy," he said.
Most Czech political parties back nuclear power, but the cabinet reiterated its opposition on Wednesday to providing price guarantees for power generated by the new reactors.
President Milos Zeman said he favoured winding down the tender and opening a new one with more bidders.
Those seeking to build the reactors were Toshiba unit Westinghouse and a consortium including Russia's Atomstroyexport. France's Areva was earlier disqualified from the Czech Republic's biggest ever public tender.
Westinghouse and the consortium had no immediate comment.
Minority shareholder Michal Snobr called the decision a "rational" choice that removed the threat of the government pushing CEZ into a loss-making project.
The decision also provides CEZ with more scope on dividend payments, a possible boon for the government which holds a 70 percent stake in the $14.8 billion utility.
The finance ministry has already called for CEZ to pay out all of its 2013 profit, instead of its traditional 50-60 percent of profit.
Snobr said despite falling EBITDA and net profits, CEZ would generate high free cash flow in the coming five years thanks to high write-offs.
"CEZ will be able to maintain a dividend of around 45 crowns," he said.
CEZ paid 45 crowns in 2011 and 40 crowns for 2012.
Brokerage Patria Finance raised its target price on CEZ by 25 crowns to 625 after the decision was announced.
Nuclear prospects have dimmed in Europe following Japan's Fukushima disaster and a sharp fall in wholesale power prices.
The industry was keeping a close eye on the Temelin tender to see whether the government would follow Britain's lead and agree to guarantee prices for the power produced.
Britain awarded a 19-billion-euro contract last year including a 35-year deal to guarantee power prices to build the first new nuclear plant in Europe since Fukushima. It involves a consortium made up of EDF, Areva and Chinese state-owned companies CGN and CNNC.
CEZ had sough similar support which the government refused to grant.
"There is overcapacity in Europe and there is no need for large baseload generators," said Jan Ondrich, an analyst at Prague-based Candole Partners, a longtime critic of the tender.
"Power prices will likely stay low given expansion of wind and solar in Germany, low hard coal and low carbon prices."
Other nuclear projects in central Europe are Slovakia's completion of the Mochovce plant and Hungary's deal with Russia to build two 1,200 MW new units at the Paks plant.
CEZ operates two nuclear units at Temelin in southern Czech Republic and four at Dukovany in the south-east. (Additional reporting by Robert Muller, writing by Jan Lopatka and Michael Kahn; editing by Jason Neely)