Smart metering to change the industry in South Africa

Cape Town, South Africa, February 10, 2010 – The electricity metering market in South Africa is facing a period of change due to the implementation of smart metering systems, according to study by research firm Frost and Sullivan.

This change is being driven by demand-side management initiatives and supporting government legislation, brought about by the national energy crisis.

“Smart meters will allow for the implementation of time-of-use tariffs and remote disconnection of household appliances through two-way communication capabilities with utilities,” explains Frost and Sullivan Research Analyst Ross Bruton. “This is expected to assist in decreasing peak demand in the country, thereby mitigating the current strain on Eskom’s spare capacity.”

New analysis from Frost and Sullivan, South African Electricity Metering Market, finds that the market earned revenues of over $14.7 million in 2008 and estimates this to reach $50.5 million by 2014.

The smart meter market in South Africa will be experiencing growth in the next few years through the replacement and conversion of obsolete credit and prepaid meter technologies. The end users covered in this analysis are residential, commercial and industrial.

“Smart meters represent the future of electricity metering in South Africa,” says Bruton. “The Electricity Regulations Act of 2006 specifies that all end-users with a monthly usage of 1000 kWh or more need to be on smart metering systems by January 2012. Smart meter implementation in the country is expected to represent substantial revenue growth in the electricity meter market, as each smart meter unit is significantly more expensive than traditional credit and prepaid meters.”

Although this Act is currently under review, the final document is expected to have a similar requirement. Eskom and regional municipalities are therefore legally committed to commence with the introduction of smart meter systems over the next few years.

However, although smart meter rollouts are expected to be governed by government legislation, the electricity distributors – particularly municipalities – have raised concerns on the available funds to implement these initiatives due to the high equipment cost of smart meter units and supporting communication infrastructure that will be needed to operate the smart grid.

“Furthermore, smart meter specifications set out in the NRS 049 document, for national standardization of the meters, are still unavailable, restraining electricity distributors from beginning the sourcing of smart metering systems,” explains Bruton. “Growth in the smart meter market will also be limited by the availability of funds to electricity distributors.”

Several electricity distributors are likely to turn to the government for financial aid for the smart meter rollout implementation.

“Suppliers should aim to provide NRS 049 compatible meters to electricity distributors at the most affordable price possible, while continuing to offer after-sales support in product maintenance, repair, and training,” concludes Bruton. “Such suppliers will be sought after by the electricity distributors.”


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