The widespread roll out of so-called smart energy meters capable of providing detailed real time information on energy use moved a step closer last week following the launch of a major trial of the technology.

Through the pilot scheme 40,000 households are to receive either state of the art smart meters or simpler electronic display devices with the government investing £10m in the initiative and energy firms EDF, E.ON, Scottish and Southern Energy and Scottish Power investing a further £10m.

Many large businesses have had smart meters for some time, but it is hoped that the pilot represents the first phase in a wider roll out of the technology in homes and smaller businesses. Under government targets smart meters are to be installed in all households within ten years and to all but the smallest businesses within five years.

Experts said the aim of the trial was to investigate the scale of the impact smart meters have on energy use and also explore whether it will be more effective to roll out intelligent smart meters capable of sending information back to the energy supplier - which should eradicate the need to estimated bills, allow utilities to provide better energy efficiency advice, and provide energy usage data to customers through their TVs or over the internet - or simpler real time display units that are clipped on to existing meters and make it easier for people to work out how much power they are using and what it costs.

Business and Enterprise Secretary John Hutton said that the results of the trial "will provide invaluable evidence to support the future rollout of displays and smart meters".

However, Nikki Bowles of the Energy Retail Association said that it was already a "no brainer" that sophisticated smart meters would prove more effective at reducing carbon emissions. "Our metering system is very outdated and there is a real need for smart meters," she said. "All the evidence suggests that these more intelligent systems have a genuine impact on carbon emissions. If we go with electronic display devices that are not sending information back to suppliers then estimated bills will continue and users won’t be able to get the same quality of information."

A spokesman for EDF agreed that there was evidence that smart meters could contribute to a considerable reduction in carbon emissions. "Our major business customers who have had smart meters for some time, such as supermarkets, tell us it is critical that they have the real time accurate information smart meters offer, rather than traditional estimated bills, if they are to reduce carbon emissions," he said. "Having this information also means that we as suppliers can offer far more detailed advice on the steps they need to take to improve energy efficiency."

A spokesman for industry regulator Ofgem predicted that the roll out of smart meters could also pave the way for full blown intelligent grid technologies whereby electronic devices could be integrated with the smart meters so that they are automatically turned off at times of peak demand. For example, the grid would be able to work out when supply was getting tight and conceivably turn off people's freezers or washing machines for an hour as demand peaked.

However, EDF's spokesman warned that while such innovations were feasible it could be many years before such technologies are widely available. "The smart meters in this trial are early generation devices," he said. "There is still a lot of work to do in terms of standardisation and development before we can roll out a truly intelligent grid."