Smart metering to change dynamics of electricity metering in South Africa

Cape Town, South Africa — (METERING.COM) — February 11, 2010 – The electricity metering market in South Africa is facing a period of significant change due to the implementation of smart metering systems, according to analysts Frost & Sullivan.

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

A new analysis by Frost & Sullivan has found that the South African electricity metering 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 experience substantial growth in the next few years through the replacement and conversion of obsolete credit and prepaid meter technologies.

“Smart meters represent the future of electricity metering in South Africa,” said Frost & Sullivan energy analyst Ross Bruton. “The Electricity Regulations Act of 2006 specifies that all end-users with a monthly usage of 1,000 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 availability of funds to implement these initiatives due to the high equipment cost of smart meter units and supporting communication infrastructure.

Furthermore, the NRS 049 smart meter specifications for national standardization of the meters have not yet been confirmed. However, once these specifications have been met, growth in the smart meter market is expected to experience a sharp rise, subject to the availability of funds.

Frost & Sullivan point out that approximately 95 percent of end-users are residential, thus representing the greatest opportunity for demand side management implementation. Municipalities plan to begin smart meter conversions for consumers with a monthly usage of 1,000 kWh and above and then work their way down to smaller users.

The other 5 percent of end-users are commercial and industrial, and a large majority of these customers are already on AMR metering systems and in many areas large industrial users have already been converted to AMI. Conversions of other C&I customers to AMI are expected to occur relatively rapidly during the course of the next few years, driven by the Electrification Regulations ACT of 2006.

“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,” added Bruton. “Such suppliers will be sought after by the electricity distributors.”