How a PPA works in Denmark

A power purchase agreement, or PPA, is a long-term contract in which a company buys electricity directly from a solar park, a wind farm or another renewable plant at a price agreed in advance. The buyer is called the offtaker. The seller is the producer, often an independent power producer that owns one or a few plants. In Denmark the idea is the same as anywhere in Europe, but a few local facts shape how a deal is built: the country is split into two bidding zones, negative prices are becoming common on sunny days, and the price a Danish company pays for power includes taxes and tariffs that sit outside the PPA.

This guide walks through how a PPA is put together in Denmark, what drives the price, and which clauses both sides look at first.

Who takes part in a PPA

Three parties usually appear. The producer owns the plant and wants a predictable income, which is what lets it finance construction or refinance an existing park. The offtaker is the company that uses the power, for example a data centre, a food producer or a logistics company, and wants a stable price and documentation that its power is renewable. In a physical PPA an electricity supplier also takes part: it handles delivery through the grid, balances the power against the buyer’s actual consumption and takes care of the practical settlement. This is often called a sleeved PPA.

In Europe the classic PPA ran for 10 to 15 years. That is no longer the norm. Uncertainty has pushed both sides towards shorter terms: the share of deals of 1 to 4 years rose from about 6.8% in 2025 to about 14.6% so far in 2026, and deals of 5 to 9 years rose from 12.3% to 20.8% in the same period.

Physical, virtual and on-site PPAs

There are three common forms, and the choice decides who handles what.

• Physical (sleeved) PPA. The power is actually delivered to the buyer through a supplier, which takes it from the producer and passes it on.
• Virtual or financial PPA. No power changes hands between the two parties. They settle the difference between the agreed price and the spot price, and each buys and sells its power in the normal market. For the buyer, the guarantees of origin that come with the deal are often the whole point.
• On-site PPA. The plant stands on the buyer’s own site, for example solar panels on a factory roof.

Two bidding zones: DK1 and DK2

Denmark is divided into two price areas. DK1 covers Jutland and Funen, west of the Great Belt. DK2 covers Zealand and the islands to the east. DK1 has more wind and is more closely coupled to the German market, so its prices are typically lower than in DK2.

The split matters more than it looks. A physical PPA cannot simply be connected across DK1 and DK2. In practice it takes a supplier that sleeves the power across the zones and takes on the price-area risk. That is a real barrier to trade, and it is why a buyer in Copenhagen and a solar park in Jutland are not automatically a match, even if the price and volume fit. On the Symbolon marketplace the bidding zone is therefore part of how every offer is matched, not only a filter.

How the price is built

A seller never gets the baseload price for its power. The difference is payment for the risks the buyer takes over. In practice a PPA price is built roughly like this:

PPA price = baseload futures price − capture discount − volume-risk discount − price-risk discount − cannibalisation discount + value of guarantees of origin

The capture rate is the average price a plant actually achieves, divided by the baseload price. Solar produces when all other solar parks produce, so its power is worth least exactly when there is most of it. In the large European markets the capture rate for solar has fallen to about 50 to 60% of baseload. Wind usually has a higher capture rate, but it drops in windy winter periods when many turbines run at once.

Almost every negotiation comes back to four risks:

1. Profile risk (shape). Production does not follow consumption hour by hour.
2. Volume risk. The weather does not deliver the expected amount.
3. Balancing risk. The forecast is wrong, and the system operator charges for the imbalance.
4. Cannibalisation. The more solar and wind is built, the lower the price the existing solar and wind achieves.

This is why a price in €/MWh on its own says little. Two offers at the same price can be very different deals depending on who carries each of these risks. Our guide to pay-as-produced and baseload PPAs goes through how the volume structure moves them between the parties.

Negative prices

Negative prices occur when green production is higher than consumption. On sunny summer days in Denmark, solar can cover 20 to 30% of consumption in the middle of the day, and the number of hours with a negative price rises year by year.

For a PPA the question is simple and decisive: does the seller still receive the fixed price in those hours, or does settlement stop at zero? It is one of the most common dealbreakers in a Danish solar PPA, and it is best agreed early. There are broadly three answers: the seller carries it, the buyer carries it, or it is left open for negotiation.

Taxes and tariffs sit outside the PPA price

A Danish company usually thinks in the delivered price of power, including grid tariffs and taxes, while the PPA market talks in euros per MWh at plant level. The two are not the same number, and a deal is easier to discuss when both sides know which one they mean.

The electricity tax is an example. It has been reduced to 0.8 øre/kWh in 2026 and 2027, down from 90 øre/kWh in 2025. That changes the economics for the consumer considerably, but it does not touch the PPA price itself. Grid tariffs are likewise paid on top.

Guarantees of origin

A guarantee of origin (GO) is the proof that power is renewable. One GO equals 1 MWh of renewable production. GOs are traded separately from the power itself, so the contract has to answer one question that is easy to ask and expensive to overlook: do the GOs follow the power, or are they sold separately? A buyer that wants to report green power needs them. A deal where the two sides assume different answers tends to fall apart late and at a cost.

The clauses that are always negotiated

Europe now has a common standard for corporate PPAs, published by EFET together with RE-Source. Lenders have reviewed it and confirmed that it is bankable, meaning it can be used as a basis for project finance. It covers both physical and financial PPAs and uses an election sheet: a structured list of choices that adapts the standard text to the specific deal, instead of writing the contract from scratch.

Whatever the template, these points come up in almost every Danish negotiation:

• Price formula: fixed, indexed, or a floor and cap (a collar)
• Volume structure: pay-as-produced, baseload or pay-as-consumed
• What happens in hours with a negative price
• Balancing responsibility: who has it, and who pays for imbalances
• Curtailment: who pays when the plant is asked to produce less
• Guarantees of origin: do they follow the power
• Change of law: what happens if taxes or rules change. Lenders want the project’s cash flow protected.
• Credit support: a bank guarantee or a parent company guarantee, especially from smaller buyers
• Force majeure
• Default and termination

Where Symbolon fits

Large PPA platforms tend to serve large projects and large buyers. Smaller producers and mid-sized companies in Denmark and the rest of the Nordics often have no analyst on staff, and their deals can be too small for the big auction platforms. Symbolon is a marketplace and broker for exactly that segment. Producers and buyers list what they offer or need without their names, every match is scored hour by hour, and Symbolon makes the introduction when both sides are ready.

If you buy power, see how Symbolon works for buyers. If you own or develop a solar, wind or storage project, see how Symbolon works for developers. You can also browse the market or book a 30-minute call to talk through a specific deal.