Czech lawmakers approve aid to renewables, less keen on solar projects

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PRAGUE, July 14 (Reuters) - Czech lawmakers on Wednesday approved a law setting up support for renewable energy sources, but solar industry representatives said the level of help for their sector was insufficient to attract investments needed to meet EU environment targets.

The bill approved by the lower house of parliament sets the framework for supporting renewable energy sources in the years ahead, which investors need for commitments to new projects.

Under the law, levels of support differ according to the kind of renewable technology employed. Aid would be available for solar projects generating a maximum rate of return of 6.3%. In contrast, support would be available for biomethane initiatives bringing a return of up to 10.6%.

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Many energy industry participants including the biggest utility CEZ (CEZP.PR) believe solar has the highest potential in the landlocked country.

The Czech Chamber of Renewables (Komora OZE) welcomed the bill as a way to unblock the sector after years of stalemate amid a lack of public aid, but said the rates of return should be set equally for all sources.

"The bill is absolutely essential for development of renewables... unfortunately, the allowed returns are set wrong, which hurts almost all kinds of renewables," the chamber said.

Solar energy has long been unpopular among Czech politicians since high compensation led to an uncontrolled boom in solar in 2009-2010, costing around 1.8 billion of euros in subsidies per year to the sector split between consumers and the government.

The bill also raises special taxes paid by solar plants built in 2009-2010.

"This is threatening thousands of companies and billions of crowns worth of loans, it burdens the sector. The Czech Republic will have hard time looking for someone willing to invest in the sector," the Czech Solar Association Chairman Jan Krcmar said.

Majority state-owned electricity producer CEZ (CEZP.PR) plans to invest $4.15 billion - four times its 2020 profit - into building 6 gigawatt of solar power capacity by 2030.

CEZ will not comment on the bill until it is finalised, a spokesman said.

Environmental group Hnuti Duha said new solar projects could still be supported from the EU's Modernisation Fund.

The bill is yet to be debated by the upper house of parliament which may suggest amendments.

Separately, the European Commission proposed on Wednesday its most ambitious plan yet to tackle climate change.

($1 = 21.6780 Czech crowns)

(1 euro = 25.6319 Czech crowns)

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Reporting by Robert Muller, editing by Jan Lopatka, William Maclean

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