* EPH, Seven Energy submit bid for Engie plants - sources
* Part of strategy to wring profits from fossil-fuel plants
* Targeting assets discarded by energy giants going green
* However face regulatory risks and threat of low prices
By Michael Kahn, Jason Hovet and Arno Schuetze
PRAGUE/FRANKFURT, May 18 (Reuters) - Two Czech power companies are targeting fossil fuel-fired plants in Germany as part of a contrarian strategy to snap up older, polluting assets on the cheap from European energy giants going green.
EPH and Seven Energy have submitted rival offers for French group Engie's plants near Munich and Bremen, as well as its 52 percent stake in a plant in Wilhemshaven, according to two utilities banking sources familiar with the matter. The assets are expected to fetch a few hundred million euros in total, they said.
EPH and Seven Energy both told Reuters they were interested in acquisitions in Germany, but declined to comment on whether they had bid for the Engie plants.
Engie declined to comment.
The Czech firms, both backed by billionaires, have no links with each other, but share a common game plan: they are looking to buy up old coal and gas-fired plants being discarded by big players like Engie, Vattenfall and EnBW who are trying to set themselves up for the future by switching to renewable generation.
Fossil fuel, or thermal, power still accounts for almost half of the EU's electricity. EPH and Seven Energy are betting the plants will need to remain operational over the next 20 years for back-up power to stabilise grids when demand outstrips supply from less predictable wind and solar.
There are potential difficulties and risks associated with this strategic focus on conventional power generation, where margins are increasingly squeezed because of low wholesale prices and a surge in renewable capacity.
Governments or regulators, aiming to meet tough pollution targets, could also decide to limit power generation from coal plants. This happened to EPH in Britain where it announced in February it would close the Eggborough plant after failing to secure an agreement to provide back-up capacity.
The company said without a contract for future years it would not be economically viable to continue operations. A planning application is in progress to develop a new gas-fired station at the site, but it is unlikely to be operational until the 2020s.
Tomas David, vice chairman of EP Power Europe - EPH's power generation division - said the company was interested in assets critically needed to meet a country's power needs.
"This is the reason for our interest in German lignite," he told Reuters, referring to a type of coal.
Privately held EPH - run by Czech billionaire Daniel Kretinsky - has bought fossil-fuel plants in Germany, Italy and Britain over the past three years, from Sweden's Vattenfall, German group E.ON and UK company Centrica.
Producing more than 100 terawatt hours of power annually, EPH says it is among Europe's top 10 electricity producers. Its power generation portfolio makes about 7 billion euros ($8.3 billion) in annual revenue, which along with an ability to raise billions more in debt provides a significant warchest for acquisitions.
Newcomer Seven Energy, launched in February by Pavel Tykac, has more than 1 billion euros to spend and said it saw potential for acquisitions in Germany, Britain, Italy and the Benelux countries.
Seven Energy CEO Alan Svoboda said he aimed to close at least one deal this year. Several others are in late-stage negotiations, each typically worth a few hundred million euros, he added.
As part of its plan to wring profits from existing coal and gas plants, it has brought in a number of former top officials from Czech firm CEZ, central Europe's biggest utility.
Svoboda said Finnish group Fortum's 3.8-billion-euro bid for a stake in German thermal power generation firm Uniper, if successful, would likely trigger sales of fossil fuel power assets that would be attractive for his company.
"We are looking at it opportunistically," he said.
EPH and Seven Energy are not alone in targeting thermal power assets, although the field of potential buyers is small because such companies need to be free from political pressure to reduce carbon footprints, according to analysts.
Investment funds such as I Squared Capital, First Reserve and KKR have all acquired utility assets in the past. Among others, I Squared Capital bought Irish energy group Viridian, First Reserve has bought the UK's Morrison Utility Services, KKR bought France's A2A Coriance.
Other thermal plants that could come up for sale, according to utilities bankers, are EnBW's German coal plants in Heilbronn, Karlsruhe as well as Rostock, which is co-owned with Vattenfall.
Austria's EVN could also sell its 49 percent stake in the Duisburg Walsum plant, the bankers said, adding that no decisions on these assets had been taken yet.
EnBW and EVN declined to comment.
Jiri Gavor, head of Prague-based energy consultant ENA, said EPH and Seven Energy's strategy could bear fruit because Europe's push to replace coal with renewables would not be as quick or smooth as politicians would like.
He added: "(Other investors) don't have the competence like EPH or Seven in running these old power plants."
$1 = 0.8488 euros Additional reporting by Christoph Steitz in Frankfurt and Nina Chestney in London; Writing by Michael Kahn; Editing by Geert De Clercq and Pravin Char