A committee of MPs has claimed that installing smart meters will only save UK consumers two per cent on their annual bills.
The Public Accounts Committee (PAC) warned that savings will amount to just £26 a year, and that the technology may be out of date by the time installation is complete.
The warning challenges the view held by the Department of Energy and Climate Change (DECC), which states that smart meters will lower bills and make switching energy provider easier.
The meters will cost £215 per household to install, totalling £10.6 billion across the country. Installation will begin next year, with consumer being charged an annual amount on their bills to cover the cost, peaking at £11 a year in 2017.
The £26 annual saving does not include the installation cost and MPs have cautioned that even the two per cent saving is dependent on consumers reducing their current energy use.
It has also been claimed that the technology is likely to be redundant by the time installation is complete.
The meters will consist of an in-house display telling consumers how much energy they have used and how much it is costing. However, MPs have said that this information could be viewed using a smartphone app, limiting the need for the costly installation process.
Despite the criticism, energy minister Baroness Verma said in an interview with the BBC that the smart meters would help consumers understand their energy use and bring an end to estimated billing.
"The nationwide rollout is part of the Government's complete overhaul of the UK's energy infrastructure which will revolutionise the market and support the development of smarter electricity grids."
However, the latest criticism threatens to further undermine the project, which has already run into a series of delays.