Smart metering differs from old-fashioned mechanical electricity meters in several ways. It allows a meter to be read remotely, without sending an employee to read the meter at the customer's premises.

It is hooked up using either a wireless or landline internet connection to the utility, and records what times during a day electricity was used by individual customers. It would then be possible to charge different prices for different times of day, giving extra incentives to consumers to use electricity at off-peak times.

The technology also has the potential to facilitate microgeneration, upending the traditional model of generating electricity at large, centralised plants and sending it down transmission lines. Two-thirds of the energy generated is lost in between the generating station and the house or business, making it a prime source of potential energy conservation.

Though the state-owned utilities in Ireland have long rubbished the technology, as they once attempted to rubbish the viability of wind power, other European countries and nearly half of US states have embraced it.

The practice is becoming increasingly widespread in several of Europe's leading countries for renewables, particularly Denmark, which has moved almost completely away from centralised generation from large power plants since 1980.

However, the ESB has indicated that it views the main benefits of smart metering as promoting energy conservation among its customers, through the introduction of variable tariffs throughout the day, and a reduction in electricity theft.

"Smart metering will facilitate the introduction of time of use tariffs by electricity suppliers for domestic and small business customers. These are tariffs where the price of electricity varies at different times of the day to reflect the changing cost of producing electricity, " said a spokesman.

"This should lead to savings in electricity costs for the customer and reduces the peak usage of electricity which benefits all of us."

The company's chairman, Tadhg O'Donoghue, added that despite the government's smart metering plans, it was unclear when microgeneration would be introduced in Ireland.

"It is the next generation of technology and a lot will depend on the success of our current smart metering tests and if that is a success, that will be rolled out and once that's rolled out, all these other issues will flow back in, " he said.

Meanwhile, the chairperson of national grid operator Eirgrid, Bernie Gray, said that grid would be able to handle microgeneration but that she expected the amount of power to be generated from it to be negligible.

"It would be so small that in terms of the impact it would have on the grid, it wouldn't be material, " she said.

Gray said that, although Eirgrid could see the long-term potential of microgeneration technology, smart metering would be "more able managing demand than managing supply.

"It would allow customer to measure their consumption and know what the cost of that consumption was."

As the technology becomes more widespread, some Irish businesses have already taken steps to enter that market. Futumeter, a firm with offices in Galway and Letterkenny, distributes Portugese-made smart meters in Ireland and the UK. As part of its announced change in strategy, the electrical goods maker Glen Dimplex said last month it planned to enter the market for smart meters.

Eirgrid, which on 1 July took on the roles of wholesale market operator and independent transmission operator in the Republic, reported that elecricity demand grew 4.4% last year.