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Integration of sensing and actuation systems, connected to the Internet, is likely to optimize energy consumption as a whole. It is expected that IoT devices will be integrated into all forms of energy‐consuming devices (switches, power outlets, bulbs, televisions, etc.) and be able to communicate with the utility supply company in order to effectively balance power generation and supply.

IoT technologies offer consumers, manufacturers, and utility providers new ways to manage devices and ultimately conserve resources and save money by using smart meters, home gateways, smart plugs, and connected appliances.

The introduction of electric smart plugs, in‐home displays, and smart thermostats has given consumers a choice of which household devices they want to monitor. Additionally, the IoT delivers more data for manufacturers and utility providers to reduce costs through diagnostics and neighborhood‐wide meter reading capabilities [Monnier 2013].

Besides home‐based energy management, the IoT is especially relevant to the Smart Grid since it provides systems to gather and act on energy and power‐related information in an automated fashion with the goal to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.

Another application is a city energy consumption service to monitor the energy consumption of the whole city [Zanella 2014]. This service enables authorities and citizens to get a clear and detailed view of the amount of energy required by different services (public lighting, transportation, traffic lights, control cameras, heating/cooling of public buildings, etc.). This service helps identify the main energy consumption sources and to set priorities in order to optimize their consumption behavior.