Oil Report

CEZ halts approvals for solar, wind power plants

* Fears grow network cannot handle surge in capacity

* Sector boosted by high feed-in tariffs

PRAGUE, Feb 16 (Reuters) - The distribution arm of the main Czech power firm CEZ CEZPsp.PR halted issuing approvals for connection of new solar and wind power plants to the grid on Tuesday because a boom in the sector threatened grid stability.

The CEZ decision heeded a call from the country’s high-voltage network operator CEPS, which had warned it would have to start turning some plants off to keep the grid stable.

“The size of the demanded capacity threatens the safety and reliability of the electricity network, therefore the company management...decided to immediately meet the request of CEPS,” CEZ said in a statement.

Solar and wind power is unstable due to fast uncontrollable changes in output, and its growing proportion in the power mix brings a threat of sudden power surges or drops.

The Czech Republic exports power and the grid has large exchanges with German, Polish, Austrian and Slovak networks.

The interruption of approving new plants follows a surge in solar projects caused by legislation that guarantees high feed-in tariffs that distributors must pay to producers.

A drop in prices of solar panels and their growing efficiency has cut the return on investment into new plants to just a few years, making it a safe and high-yield bet.

CEPS said last week that about 3,500 megawatts worth of new solar and wind capacity had been approved, much more than the network can handle. The country now has 600 megawatts in solar and wind power production capacity.

The parliament has been discussing legislation that would allow a cut in the feed-in tariffs for new plants as of next year, but its approval prior to parliamentary election in May is uncertain.

Prague city distributor Prazska Energetika said it had also halted issuing new approvals for wind and solar plants. A spokesman for E.ON EONG.DE, the country's third distributor, was not immediately available for comment. (Reporting by Jan Lopatka; editing by James Jukwey)