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* To take part in consolidation in core markets medium-term
* No comment on potential minority stake in Innogy
* Analysts, investors have pointed to RWE/Uniper tie-up (Adds quote from CEO, context)
By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF, Germany, March 28 (Reuters) - RWE will play an active role in consolidation of the power generation sector but will favour cost discipline over large-scale M&A as Germany's biggest power producer goes on the offensive after years of crisis.
RWE, Germany's third-largest energy group by market value, last October listed its healthy assets in a new company Innogy in response to a sector crisis that also forced peer E.ON to break up its business.
The move brought in fresh capital without diluting its equity, giving RWE room to manoeuvre after years of falling wholesale power prices and Germany's decision to exit nuclear almost destroyed its traditional business model.
RWE will now concentrate on growing its business of providing safe round-the-clock power supply, something that intermittent renewable sources cannot do, Chief Executive Rolf Martin Schmitz said at the group's capital markets day.
"We can do this either organically or through selective opportunistic acquisitions should any of the existing players decide to partially exit the market at attractive prices," he said.
The focus will be on RWE's core markets - Germany, Britain and the Netherlands, RWE said.
Finance chief Markus Krebber cautioned there were no concrete M&A plans and that the company would take a "very disciplined and selective approach" to any M&A activity.
Schmitz fuelled M&A speculation in mid-March when he said RWE was considering several strategic options, including tie-ups with rivals and the sale of a stake in Innogy, in which RWE owns 76.8 percent.
Analysts and investors have highlighted the possibility of RWE taking over Uniper, the former power plant and energy trading business spun off from E.ON, which still owns 46.65 percent.
"A tie-up of RWE and Uniper could lead to synergies in the operation of power plants," said Thomas Deser, senior fund manager at Union Investment. "But such a move would have to clear regulatory hurdles."
Schmitz declined to comment on whether RWE would also be comfortable with owning a minority in Innogy, saying only that RWE would manage its stake in the networks, renewables and retail group in a way that would maximise value for investors.
He also ruled out selling power plants, adding Germany's biggest power producing group felt comfortable with its current setup of 41.9 gigawatts (GW) of generation capacity, more than half of which are from lignite and gas. (Editing by Maria Sheahan and Susan Thomas)