INTERVIEW-Funding woes could hit Czech grid project-CEPS

                                
 * Financial constraint could slow projects
                                
 * Grid operator eyes loans
                                
 
                                
 By Michael Kahn
                                
 PRAGUE, Aug 19 (Reuters) - Funding constraints could limit
the number of projects needed to improve the Czech power grid to
cope with a surge of new generation expected by 2020, an
official at the transmission operator said on Wednesday.
                                
 Investment is needed to ensure the transmission system can
handle more than 4,000 MW of estimated new generation slated to
come on line in the next decade, Andrew Gayo Kasembe, head of
transmission system development at grid operator CEPS, said.
                                
 "It is a very big issue because there are so many projects
in front of us," he told Reuters at the CEPS office in Prague.
"We see the money assigned every year from the state does not go
in parallel with the number of plans we have."
                                
 CEPS plans to invest about 2.5 billion Czech crowns ($137.7
million) annually over the next four years to build new power
lines, boost transmission capacity of some existing lines and
convert substations to remote control operation.
                                
 But beyond that the grid operator will need to invest even
more to build new power lines and substations to handle the new
generation, Kasembe said. 
                                
 This includes construction of a new power station at
Chotejovice and a projected 10 billion crown investment needed
to connect two new planned nuclear reactors at Temelin, operated
by Czech utility CEZ <CEZPsp.PR>, to the grid.
                                
 Connection fees paid by grid users in most cases are not
enough to match the amount CEPS must invest to ensure connection
to the grid, Kasembe said.
                                
 This means CEPS may look to loans to finance the projects
that will cost billions of Czech crowns, Kasembe said.
                                
 Another option is to scale back the number of planned
projects aimed at strengthening the grid to focus on the most
important ones, he added.
                                
 "If you have several projects in one year it is going to be
necessary to prioritize projects," Kasembe said.
                                
 Aside from financial concerns, CEPS also has to deal with a
sticky regulatory landscape that makes it difficult to get
right-of-way to run new power lines across private property,
Kasembe said.
                                
 He also said the grid operator was looking into so-called
smart grids where consumers can adjust electricity use to
benefit from cheaper energy at times of low demand and reduce
consumption at peak times.
                                
 For a factbox click on [ID:nLJ48645]
 (Editing by James Jukwey)