Birmingham City Council has named Carillion Energy Services as the preferred bidder for a £600m contract to retrofit 60,000 with homes with energy efficiency measures by 2020.

Payment for the improvements, which include fitting insulation and new boilers, will be recovered in instalments from residents’ energy bills.

To qualify for the Birmingham Energy Savers scheme, the estimated saving on residents’ household energy bills must equal or exceed the cost of the improvement work. Those that cannot achieve this ‘golden rule’ may be eligible thanks to the Energy Company Obligation – a fund set up by energy firms to help struggling households improve their energy efficiency.

Birmingham’s Cllr James McKay, cabinet member for a green, safe and smart city, said: ‘This decision represents a major milestone in Birmingham’s green ambitions, and demonstrates that the social justice and environmental agendas go hand-in-hand with each other.

‘It will reduce energy bills for citizens by up to £300 per year – taking up to 40,000 people out of fuel poverty by 2015 – create jobs in the technology supply chain and ensure that there are less carbon emissions from the city.

Managing director of Carillion Energy Services, Nigel Taylor, revealed that following the bid, Carillion has ‘committed to create and sustain at least 360 jobs through our own investment and skills training – and to generate many more employment opportunities by encouraging our business partners to invest locally in a range of new green energy facilities.’

‘Birmingham Energy Savers is genuinely ground breaking and we are hugely excited to be named as preferred delivery partner. The strength of our bid is in how we will work with communities, our supply chain, small businesses and social enterprises such as groundwork to deliver a very local solution, which leaves as much economic and social value as possible in Birmingham,’ Mt Taylor added.

Also attending the announcement was energy and climate change minister Greg Barker, to formally award £2.6m of funding to Birmingham from the Core Cities Go Early programme, designed to kick-start activity on the Government’s Green Deal.