The Birmingham Energy Savers scheme will see Carillion install energy efficiency measures like insulation and new boilers by 2020 in homes, schools and other council properties.

The initial eight-year deal is worth around £600m but could grow to £1.5bn if it is extended across the wider West Midlands area.

Under the Green Deal scheme, payment for improvements will be recovered in instalments through lower energy bills.

Carillion’s Chief Executive Richard Howson, said: “Birmingham Energy Savers is a genuinely ground-breaking contract and we are delighted to be named as Birmingham City Council’s preferred delivery partner.

“As well as demonstrating the increasingly important role that energy efficiency services are playing in the economy, this contract highlights the benefits of having a leading independent energy efficiency services capability.

“I believe our leadership in developing a sustainable business also played a key part in this success.

“By engaging with our supply chain partners, particularly local small and medium-sized businesses, and with social enterprises we can deliver service solutions that create jobs and offer training and development opportunities to support the economic and social development of the communities in which we operate.

“This is the first of a number of major contracts of this kind that Carillion is either bidding, or expects to bid, under the Green Deal or Energy Company Obligation, and we expect to continue to play an active role in helping to develop this exciting new market.”

Energy minister Greg Barker said: “Birmingham City Council is really taking the lead in reducing fuel poverty and making Birmingham cleaner and greener.

“The Green Deal will be a vital tool in helping the City reach its ambitious targets, allowing people to get energy efficient upgrades to their home and save money in the process.

“The funding we have given Birmingham will help kick-start the Green Deal and I’m excited by the Council’s plans to transform buildings and save energy.”