DECC has announced it is providing a total of £9.4 million in funding to boost low carbon heating in the country.
A £7 million pot is available for developers across the UK for new heat network technologies such as recovering industrial heat or energy from waste.
Under the scheme, businesses will be able to compete for contracts to test and develop pre-commercial technology.
Almost 2.4 million will also be offered to 32 local authorities across England and Wales to support the development of heat network projects.
Energy Secretary Ed Davey said: “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.”
Around 15% of UK heat demand could be cost-effectively met by heat networks by 2030 and more than 40% by 2050, according to DECC.