The deal will lead to a "narrow political agreement", DWIA said, meaning the government's proposed new support system, put forward over the summer, will be able to pass into law without the need to consult the industry or negotiate with opposition parties.
In June, the Danish government laid out plans to support up to 200MW of new renewable energy in technology-neutral auctions in 2018 and 2019.
This week, the energy ministry announced a deal with the DPP, providing DKK 1 billion (€134 million) — down from the originally planned DKK 1.3 billion (€175 million) — to procure only 190MW of new renewable capacity, either from solar or wind, in auctions in the next two years, after the current system expires in February 2018.
"This deal can do three things at once: We ensure continued green conversion in Denmark away from fossil fuels and over to wind and solar; we ensure that there will be competition to deliver the most green energy to consumers; and we ensure that there are no unexpected extras to consumers," said energy, supply and climate minister, Lars Lilleholt.
DPP energy commissioner Mikkel Dencker, added: "Today, there are over 30 different renewable energy support rates in Denmark. It is opaque and gives unexpected budget overruns and extras to consumers, and it does not ensure the most sustainable green energy for the money. We must leave this agreement and this is an important step in that direction."
The new model would involve a fixed feed-in premium, which DWIA predicts at roughly DKK 0.13/kWh (€0.017/kWh), over a 20-year contract. The current, out-going system for wind projects offers a tariff of DKK 0.25/kWh (€0.034/kWh).
The government prefers the fixed-price option as the risk is transferred to the project owners should electricity prices increase.
DWIA has called for a different system, similar to the contract for difference models seen in the UK, Germany and for Danish offshore projects. In August, DWIA said its plan could deliver double the capacity of wind at a lower price over shorter contract periods.
"I think it's very sad that Denmark takes a different path than the rest of Europe. The government's model does not guarantee a steady pace in the green transition and does not get the most renewable energy for the money," said Jan Hylleberg, director of the Danish Wind Industry Association.
A political agreement with the DPP, which is not in government but is supportive of the minority coalition administration, means the plan could be passed with a one-seat majority in the Folketing.
"Government parties do not wish to give priority to energy policy that ensures a stable and inexpensive expansion, and which also supports the business strengths we have in Denmark. Instead they prioritised a model that only helps [predict] the budgeting of finance, despite the fact that this option does not get the most renewable energy for money," Hylleburg added.
Also in the deal, the government has provided DKK 150 million over three years for test turbines to be installed in 2018 and 2019 on a first-come, first-served basis.