£2.4m will be offered to 32 local authorities through the Heat Networks Delivery Unit (HNDU) whilst £7m will be made available to developers for new heat network technologies, such as recovering industrial heat or energy from waste.
There are approximately 2,000 heat networks in the UK at the moment, supplying heat to 210,000 dwellings and 1,700 commercial and public buildings. A further 150 schemes are known to be under development by local authorities across the UK.
Successful local authorities will be offered grants ranging from around £10,000 to £250,000 to kick-start heat network projects in England and Wales.
Energy secretary Ed Davey said: “Recovering wasted heat from industrial plants or landfill sites means we can heat our homes and businesses more efficiently, as well as helping to drive down energy bills.
“Improving the way we heat our buildings and helping local authorities fund innovative and more efficient ways of supplying lower carbon heat will also reduce our dependency on costly, imported gas.”