Aberdeen City Council’s Finance and Resources Committee agreed the move after a report set out how the agreements would be reached.

Aberdeen Heat and Power – which operates the supply to buildings from other district heat networks across the city – is to enter discussions with three commercial organisations and domestic households. There will also be potential additional opportunities with other commercial organisations to maximise the financial and carbon savings as the network is extended.

Council co-leader and committee vice-convener Councillor Ian Yuill said: “It is good to hear progress of the Torry Heat Network and the facility for Aberdeen Heat and Power to continue discussions with three commercial organisations as well as domestic households is to be welcomed.

“We are committed to reducing fuel poverty and the heat networks across the city which provide reduced-cost power are a major contributor to this goal as well as helping the city towards net zero.”

The report to committee said the two of the commercial organisations which will be having discussions with Aberdeen Heat and Power are Grampian Housing Association for its proposed mixed-use re-development of the former Victoria Road school and Ark Housing Association for its Balnagask Court premises.

As the new network is extended through future phases, Aberdeen Heat and Power would seek to enter further heat supply agreements with other potential commercial customers to maximise the financial and carbon saving opportunities for the heat network. The report said the Scottish Government’s Facility Services has expressed an interest in the potential for this network to supply heat to the Marine Laboratory in Torry.

The report said council officers will make annual financial proposals to the council after discussions with Aberdeen Heat and Power which would include:

• propose heat prices for each category of customer for the forthcoming year;
• take cognisance of the requirements of the Heat Networks Metering and Billing Regulations;
• take cognisance of the requirement to balance the financial sustainability of the organisations and the alleviation of fuel poverty;
• take cognisance of the state subsidy restrictions, with regard to heat pricing for commercial customers;
• propose heat prices on a city-wide, blended basis.

The report said following council approval, any decisions will be incorporated within the Heat Supply Agreements that will be offered to potential domestic and non-domestic customers of Torry Heat Network.