Leicester City Council has awarded a 25 year contract to Cofely to link and extend four existing district heating schemes.
Leicester District Energy Company has been formed as a subidiary concern to deliver the project, funded by £14m from Cofely and additional funds from the Community Energy Saving Programme.
The low carbon energy schemes are due to go live during 2012, serving 3,000 dwellings across six housing estates, as well as 15 civic buildings, through 7km of insulated pipework.
When the first phases are delivered (including the City Council, the University and the Penitentiary centre), the scheme will use a combination of over 5 MW of low carbon gas-fired combined heat and power and biomass boilers to achieve estimated CO2 emissions savings of 12,000 tonnes per annum.
A second phase of the project will extend the scheme to include HMP Leicester and the University of Leicester.
Cofely will assume operational responsibility for the existing schemes in late spring 2011.