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It is essential for Energy Management Systems (EMS) applications and control centre technologies that the measurements allow monitoring of the power system. An important tool for the EMS is state estimation which makes it possible to estimate the state variables of the power system based on these measurements. The measurements should allow observability of the power system which means they can be used to describe the system. The objective of the paper is to develop an algorithm for placement of PMUs in order to make the system observable. The novelty is that a limit on the number of measurements each PMU can make is introduced. The number of PMUs needed to make the network observable will therefore depend on the maximum number of measurements each PMU can make. The algorithm is tested on three IEEE test networks.