E.ON, one of the Big Six energy suppliers, has reported a fall in profits for the second quarter as the financial crisis in Europe hit demand for power.

The firm blamed a decline in European wholesale power prices and the boom in renewable energy for a fall in firsthalf earnings as capacity utilisation in its fossil power generation business declined.

The German utility reiterated that it would consider shutting or mothballing fossil power plants in Europe in response to what it describes as interventionist energy policies and regulations that subsidise and prioritise renewable energy.

Weak demand linked to recession in Europe has caused wholesale power prices to fall.

Meanwhile, the prioritisation of solar and wind energy in the grid has hit demand for coal and gas power generation outside peak load periods, meaning some plants must operate at a loss, or face closure.

The firm, Germany’s largest power supplier, said underlying net income plunged by 42 per cent to £1.6bn between April and June as sales slipped by three per cent.

Johannes Teyssen, E.on chief executive, told shareholders: “Much will depend on future policy decisions which largely can’t be foreseen. A sober view of the situation indicates that, at least for 2013 and 2014, no recovery is in sight.”

E.on’s gas-storage business is also losing income because there is less need for large quantities of gas to be withdrawn from storage facilities.

The share prices of Eon and its domestic rival RWE have fallen to their lowest in a decade.

“These adverse factors will continue and, according to our analysis, may actually get worse,” said Mr Teyssen.

“That’s why I announced at the start of the year that we’re responding by cutting costs and enhancing efficiency. Increasingly, however, we also must consider closing and mothballing some assets.”

“Unless the business environment of the energy industry in our core European markets changes tangibly, other plant closures will be unavoidable,”

said Mr Teyssen.

E.on is attempting to offset its domestic fossil power problems by expanding outside traditional European markets, into countries such as Turkey.

It is also investing heavily in renewables.

The firm raised prices for its dual-fuel customers in the UK by 8.7 per cent in January.