At a meeting in Alexandra this week, the Vincent Community Board dedicated funds to the $980,000 first stage of the renovation.
This part of the project includes buying and installing a new refrigeration plant for the rink, and a 350m pipe to go between it and the Molyneux Aquatic Centre.
The pipe would pump heat into the pool facility and reduce energy costs for the Central Otago District Council which owns the pool.
The grant would be paid back through the savings over about a 20-year period.
Council property and facilities manager Mike Kerr said this was based on ''conservative'' estimates for energy savings.
Board member Barrie Wills said it was ''inevitable'' the rink would need a new plant as the current one would not last.
Board member Barry Hambleton said providing the money was a ''no-brainer''.
''If we don't fund it, we're not going to have an ice rink in a year or two, anyway.''
A plan for building a new ice rink closer to the pool, which would lower energy costs even further through direct energy sharing, was abandoned this year due to cost.
Iceinline plans to raise other outside funding and to complete phase one before next winter.
The council's calculations for making back the money were based on the rink being open for six months a year.
The rink is now open three months a year, but phase two of the renovation involves enclosing the outdoor rink, allowing it to extend the season to at least six months.
Board chairwoman Clair Higginson questioned what would happen if phase two did not go ahead.
Mr Kerr said this would increase the time to make back the money.
Iceinline committee member Hugh McIntyre said the facility could still operate without the covered roof.
''If there is no phase two the worse case scenario is we have an upgraded facility.''
