Birmingham, Bristol, Leeds, Manchester, Newcastle, Nottingham and Sheffield will each receive a share of the funds based on proposals put forward by them to lower their carbon emissions.
This funding will enable the cities to test key elements of the Green Deal that includes the framework of assessment and installation.
The initiative has been designed to help residents reduce energy bills through home improvements like insulation.
DECC Energy secretary Edward Davey said that the selected cities provided ambitious plans to bring down emissions and energy use.
"I’ve been really impressed by their plans to start testing the Green Deal and transforming our homes and buildings," he added.
"This funding will help them get up and running, and I look forward to seeing a number of properties across whole communities get the energy efficient improvements they need."
