The grant will be used to fund the second phase of the Torry Heat Network.
Convener of the Council's Capital Programme Committee, Councillor Christian Allard, said: "We are pleased that the additional grant funding has been awarded and will support the next phase of the Torry Heat Network.
"This gives us the opportunity to widen the positive impact of the project in helping to alleviate fuel poverty across the community of Torry."
"It will help residents across the city who are experiencing severe cost of living pressures caused by, among other things, the Covid-19 pandemic, Russia's war on Ukraine, and rising inflation."
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Vice convener of the Council's Capital Programme Committee, Councillor Ciaran McRae, said: "We are committed to improving the lives of everyone in the City of Aberdeen.
"The availability of affordable heating contributes to this objective by providing choice and opportunities which would otherwise not be available."
The infrastructure within this next phase of this Heat Network is the main spine heat distribution pipes. These will connect with the heating network being delivered under the previously approved first phase of the Torry Heat Network project.
With this infrastructure in place, it will be capable of supplying heat to:
up to an additional 500 homes;
the new Torry Primary School and Community Hub;
Grampian Housing Association's Victoria Road School site; and
Ark Housing Association's Balnagask Court premises.
The supply, construction and installation of the network infrastructure is to be contracted out. The works will be procured in accordance with the Council's Procurement Regulations.
It is expected the work in phase two will be completed by March 2026.
