* RWE launches cost cutting programme Neo - document
* Cost cuts of at least 500 million euros - source
* Shares up 1.4 percent (Adds details on savings, document)
FRANKFURT/DUESSELDORF, July 22 (Reuters) - German utility RWE has launched a new savings programme to cope with loss-making power plants and low wholesale power prices, according to an internal document obtained by Reuters.
The document said Germany's No. 2 utility did not rule out job cuts at its power plant division as part of the programme, dubbed "Neo".
"The generation market has significantly changed to our disadvantage. To be able to survive in this environment, our work processes and costs need to be adjusted," said the document, sent to employees of RWE's power plant unit.
A source familiar with the matter told Reuters cost savings could amount to at least 500 million euros ($657 million) annually.
Along with peers E.ON and EnBW, RWE has come under intense pressure from falling wholesale power prices in Europe, its core market.
In addition, the strong expansion of renewables has hurt the profitability of gas plants, as power from solar and wind sources takes priority in being fed into the electricity grid, reducing the hours gas plants can run.
Neo has been launched on top of the group's ongoing cost savings programme "RWE 2015", aiming for additional cost cuts of about 1 billion euros by the end of 2014.
When asked for comment on Monday, RWE said that it was reviewing all of its costs, adding these reviews were ongoing.
German business daily Handelsblatt had earlier reported that RWE had launched new cost cuts.
RWE's Chief Executive Peter Terium had told Reuters last year that more job cuts were necessary at the company, which is trying to reinvent itself following Germany's decision to abandon nuclear power by 2022. ($1 = 0.7611 euros) (Reporting by Christoph Steitz and Tom Kaeckenhoff; additional reporting by Victoria Bryan and Ralf Banser; editing by Maria Sheahan and Keiron Henderson)