Sheffield is one of nine councils to win a share of £24 million for heat network schemes that act as 'central heating for cities', the Government has announced.
The money is the first round of funding from a £320 million pot to support district heating schemes which can provide cleaner and cheaper heat and hot water to homes and businesses.
In Sheffield the cash woll be used to generate heat from waste to be pumped into homes and businesses across the city.
District heat networks are seen as a way of decarbonising UK heating system by removing the need for homes and commercial buildings to have their own boilers by linking them to one single heat source.
The heat can come from combined heat and power plants, which capture and use the heat generated from burning fuel to produce electricity, as well as biomass boilers, incinerating rubbish or using geothermal energy from deep underground.
The heat is piped to homes and businesses in the network to provide hot water and heating.
Heat networks have the potential to reduce heating costs in some cases by more than 30 per cent, the Department for Business, Energy and Industrial Strategy said.
Climate change and industry minister Nick Hurd said: "This Government is committed to ensuring a clean, secure and affordable energy supply for communities and businesses across the country.
"Energy innovations like heat networks can cut costs for households and reduce carbon emissions, as almost half of the energy we use goes towards heating our homes and buildings.
"The £24 million in Government funding awarded to these projects will help deliver low carbon energy at competitive prices for local consumers."