BERLIN (Reuters) - German utility RWE can expect around 2 billion euros (£1.70 billion) in compensation over government orders to turn off lignite power stations with a capacity of 2.5 gigawatts by the end of 2022, government and industry sources said on Friday.

Operators have been negotiating with the government over the level of compensation each will receive to phase out coal as an energy source.

As part of the proposal, RWE could get an additional 700 million euros to pay for the early retirement of about 3,000 workers that would be affected by the shutdown, the sources said.

RWE declined to comment. It had been seeking 1.2-1.5 billion euros compensation per GW to be shut down.

Germany's Economy Ministry, which has the task of working out a solution with Germany's lignite plant operators, could neither confirm nor deny the figures: "I can say that the talks with the lignite plant operators are ongoing," a spokeswoman for the ministry said.

The utility's shares hit their highest levels since October 2014 on the news and traded 4.7% higher at 1220 GMT.

Germany a year ago unveiled plans to shut down all coal-fired power plans by 2038 at the latest, but is still in the process of hammering out a deal with operators over the level of compensation.

It is still unclear how a further 0.5 gigawatts of lignite capacity will be shut by the end of 2022, which was proposed by a government-appointed commission last year as a first step towards the coal exit.

German daily Rheinische Post had earlier reported the possible compensation payment for RWE, citing government sources.

The paper had said earlier this week that RWE's smaller peer Uniper was considering offering to shut down its German coal-fired power plants if its state-of-the-art Datteln 4 lignite plant can go online this year and operate until 2038.

($1 = 0.9012 euros)

(Reporting by Markus Wacket, Christoph Steitz and Tom Kaeckenhoff; Editing by Michelle Martin and Elaine Hardcastle)