Around 400 of the job losses will be felt in Sweden.
Vattenfall announced plans to save 4.5 billion kronor ($705 million) over the next two years, blaming low demand and over-capacity for the drastic move.
“These new conditions require us to further improve our efficiency and strengthen our financial position,” Vattenfall head Øystein Løseth wrote in a statement.
“I want to underline that Vattenfall will carry out these redundancies in a socially responsible manner and in close talks with the unions in the respective countries,” he added.
Around 1,500 of the redundancies will be in Germany, roughly 500 in Holland, 400 in Sweden and 50 elsewhere.
The company plans to make savings of 3 billion kronor in 2013 and 1.5 billion in 2014, partly via the job cuts, which will be implemented over the next two years.
Vattenfall also plans to sell its power station in Denmark, and part of its power plant in Lippendorf, Germany.