Abstract This paper proposes an approach for optimal placement of phasor measurement units (PMUs). It takes into account the availability of PMU measuring channels, and possible system contingencies like single measurement or branch outage. In order to solve the optimization problem, cellular genetic algorithm is applied. The proposed approach is demonstrated on an example, and comparative results are given for the IEEE standard test systems. According to the presented results, the proposed approach gives globally optimal solutions with additional savings with respect to available techniques.