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A report by Frost and Sullivan concludes that the introduction of smart meters will create a revolution in the South African power market. Analyst Ross Bruton says the energy crisis is driving the market and obliges Eskom to reduce the electricity demand. Eskom is Africa?s largest producer of electricity and is among the top seven utilities in the world in terms of generation capacity and among the top nine in terms of sales.

Smart meters are expected to improve conservation because they make it possible for utilities like Eskom to establish rates based on the time of day the power is consumed.  Bruton notes that a tiered rate should lower the demand for power during peak periods, and will lighten pressure on Eskom?s reserve capacity. The new meters can also switch off household appliances remotely, and establishes two-way communication between consumers and the power company.

According to Frost & Sullivan, the South African market for smart meters amounted for more than $14.7 million in 2008. By 2014 t the replacement and conversion of existing meter technology could grow to $50.5 million.

The Electricity Regulations Act of 2006 specifies that all end users using 1000 kWh or more in a month must have a smart meter system installed by January 2012. Bruton observed that Eskom and municipalities were legally obliged to start installing smart electricity meters even though specifications for national standards for the meters are also not yet available. .

Many South African municipalities remain concerned with the cost to deploy the expensive meters, believing they do not have sufficient funds for these much more expensive meters and the supporting communication infrastructure necessary to operate a smart grid.

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