A four-kilometre network of underground pipes is being built to provide 3,000 properties with low carbon heat.
The project in Shawfair, Scotland is a joint venture between Vattenfall and Midlothian Council and represents Vattenfall’s first heat project in the country.
It will save more than 2,500 tonnes of carbon a year, equivalent to removing 1,200 cars from the road, Vattenfall has said.
The Scottish government’s Low Carbon Infrastructure Transformation Project is contributing £7.3 million towards the structure.
The partners are looking to take this development to 30,000 households within five years.
Eoghan Maguire, Director for Scotland at Vattenfall Heat UK said: “Scotland’s ambitious net zero target of 2045 cannot be met unless district heating is deployed at scale.
“This project is such an important first step in our vision for the region. Vattenfall have developed a strategy to deliver city-wide district heating that is capable of supplying heat to the equivalent of 170,000 homes in Midlothian, Edinburgh and East Lothian by 2050, matching the scale of our heat networks in Europe.”
Councillor Dianne Alexander from Midlothian Council added: “Our innovative approach to working with a highly experienced partner will help Midlothian deliver on its ambitious net zero plans and contribute to reducing fuel poverty.”