Since the oil crises in the 1970s, Denmark’s energy system has evolved from import- and fossil fuel-dependency to self-sufficiency with a high share of renewable energy. This transformation has been supported by co-evolving energy policies. A policy shift in 2001 brought a temporary halt to the transformation, which resumed after a return in policy in 2008. Applying public choice- and path-dependency perspectives, this article analyses the development of the Danish energy system and co-evolving policies. Initial structural characteristics have strong explanatory power for the long-term policy trend: de-central ownership, and entrepreneurship have given local-level actors leverage as a political constituency. Over time de-central small-scale solutions (like windpower and district heating) secured generous state aid. Local-level actors provided technology solutions offering broad opportunities. One consequence was strong support for de-central technology solutions. The first policy shift is explained by a new government that advocated dismantling state regulation, subsidies and taxes, supported by a new political majority. The second policy shift is explained by mobilization of interests that had grown to include actors that generally supported de-regulation but saw their commercial interests threatened. The Danish model has inspired similar transformations elsewhere and offers lessons on how to overcome resistance to change.