"Conventional power generation is losing ground [and] not just at RWE," the company's chairman, Peter Terium, said in a statement.
The nation's largest power producer, RWE said it would idle 1,000 megawatts of power plants by 2017 and terminate supply contracts worth 500 MW.
Renewable resources like wind power in the European market are overtaking conventional natural gas and coal.
Terium said he was backing a market design that compensated companies for maintaining a steady supply of conventional power on hand.
"With a capacity market that is non-discriminatory and open to all technologies, Germany could create an economically feasible basis to continue to operate indispensable generation facilities -- and thus supplement the expansion of renewable energy," he said. "But we will not rely on the actions taken by the government."
RWE's electricity generation in the first half of the year fell 11 percent, while electricity sales were down 6 percent. Operating profit for the company was down 40 percent to around $3 billion.