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INTERVIEW-Czech minister: EU should change policy on renewables to help nuclear

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* Industry Minister says EU support for renewables too generous

* Sees more likelihood of only one new unit, not two, at Temelin

* Minister does not see reason to change CEZ management

PRAGUE, April 14 (Reuters) - The Czech Republic wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units and believes the European Union should be more supportive of atomic power, Industry Minister Jan Mladek said on Monday.

Majority state-owned CEZ cancelled a tender last week to build two new 1,200 MW units at the Temelin nuclear power station. The move followed a sharp fall in European power prices, and the government's denial of price guarantees had made the $10-15 billion project uneconomical.

But nuclear energy still enjoys wide political and public support in the EU member state of 10.5 million people, unlike in neighbouring Germany and Austria. Berlin declared a departure from nuclear energy in the wake of the 2011 Fukushima disaster in Japan, while Austrians have long rejected atomic energy.

In an interview, Mladek suggested that the best hope for the future expansion of nuclear power would be a shift in EU policy away from priority support for renewable energy towards more backing for the nuclear option.

"Even in Germany there seems to be a shift, which is decisive for us, unfortunately insufficient so far. But it has started at least, because it begins to be hardly sustainable for Germany, that level of support (for renewables)," Mladek said.

Under new EU rules published on April 9, funding green energy will become harder in a move designed to replace subsidies with market-based schemes, just when the Ukraine crisis has heightened the need for alternatives to imported fossil fuel.

Chancellor Angela Merkel's cabinet approved last week a reform of Germany's renewable energy law designed to curb a rise in the cost of electricity in Europe's biggest economy driven by the rapid expansion of green power.

If there is another Czech push for new nuclear units, it may be reduced to just one unit at Temelin and, as previously contemplated, one unit at the Dukovany plant in the country's southeast, Mladek said.

"If there is construction, then it will probably be one block at Temelin and one at Dukovany," he told Reuters. Dukovany and Temelin each have capacity of over 2,000 MW at the moment.

CEZ itself said when cancelling the Temelin tender that it was not giving up on nuclear power altogether, but any new decision now seems far off.

Mladek has said the state could build the new nuclear blocks through a new state-owned company, which would lease the capacity to CEZ. That would remove some of the restraints to building nuclear power with questionable returns that hold back CEZ as a publicly listed company.

Toshiba unit Westinghouse, French Areva and a Russian-led consortium including Atomstroyexport competed in the voided Temelin tender, the Czech Republic's biggest ever.

CEZ MANAGEMENT

The cancellation has renewed questions over the new centre-left government's support for CEZ Chief Executive Daniel Benes. The Czech state holds a 70 percent stake in CEZ.

Finance Minister Andrej Babis of the centrist ANO party has criticised results of state-controlled companies, including CEZ, and Czech media have speculated Benes may be under threat.

But Mladek, from Prime Minister Bohuslav Sobotka's Social Democratic party, said he saw no reason for Benes' departure.

"I have noticed some objections (towards CEZ management), but not in particular regarding the tender, as everything there was done right," Mladek said. "I don't see any reason (for management changes), definitely not because of the Temelin tender."

Shareholders are preparing to vote on a dividend. Babis has called on CEZ to pay out 100 percent of its 2013 profit, which would depart from the firm's policy of paying 50-60 percent. Analysts have said the room for a dividend would be bigger in coming years with the Temelin project scrapped.

(Editing by Mark Heinrich)