Internet of Things in Energy Market - Global Forecast 2026-2032

The Internet of Things in Energy Market size was estimated at USD 30.09 billion in 2025 and expected to reach USD 33.23 billion in 2026, at a CAGR of 10.82% to reach USD 61.78 billion by 2032.

In today’s rapidly evolving energy landscape, the fusion of connected sensors, intelligent analytics, and distributed generation assets is rewriting the rules of operational efficiency and system resilience. Across transmission and distribution networks, sensors and meters now deliver real-time performance data that empower grid operators to pinpoint inefficiencies and preemptively address maintenance needs. This shift from reactive to proactive management is underpinned by the seamless integration of edge computing and AI-driven platforms, which process vast streams of data at the network’s periphery to reduce latency and enhance decision-making. As a result, organizations can transition toward more agile, reliable, and cost-effective models of energy delivery, setting new benchmarks for service continuity and customer satisfaction.

Furthermore, artificial intelligence and machine learning have become indispensable tools for predictive maintenance and demand forecasting. By embedding machine learning models directly on IoT gateways and controllers, energy providers can uncover subtle patterns in equipment performance-such as gradual declines in transformer efficiency or anomalous fluctuations in substation temperature-that signal emerging faults. This level of insight dramatically reduces unplanned downtime, extends asset lifecycle, and optimizes resource allocation. Meanwhile, cloud-based platforms deliver centralized data aggregation, enabling cross-regional benchmarking and enabling organizations to leverage best practices across diverse operational contexts.

Security and regulatory compliance also feature prominently in the modernization of energy systems. Smart meters, critical for dynamic pricing and decentralized grid management, face mounting cyber threats that demand quantum-resistant cryptographic standards. The imperative to upgrade legacy devices to post-quantum cryptography emerges not only from future-facing security concerns but also from regulatory bodies mandating higher levels of data integrity and consumer protection. Energy companies are responding by partnering with specialized cybersecurity firms and implementing secure-by-design principles to fortify device firmware and network communications, ensuring that the integrity of the grid remains uncompromised as IoT device counts expand.

Taken together, the convergence of edge analytics, AI-driven insights, and robust security frameworks is redefining the foundational architecture of modern energy ecosystems. This transformation fosters new opportunities for decentralized energy resources, supports ambitious decarbonization targets, and paves the way for a more intelligent, resilient, and sustainable energy future.

The energy industry is experiencing a tectonic shift driven by the intersection of digital innovation, evolving regulations, and changing consumer expectations. Advances in AI-enabled platforms are enabling real-time situational awareness across the entire energy value chain. Companies are now leveraging agentic AI to automate routine tasks and adapt workflows on the fly, transforming once siloed energy functions into cohesive, intelligent systems that continuously optimize performance. This paradigm shift has elevated digital transformation from a back-office initiative to a critical strategic imperative for utilities and energy service providers aiming to maintain competitive differentiation.

Simultaneously, regulatory landscapes are shifting to accommodate and incentivize the deployment of smart grid technologies. Landmark legislation such as the Inflation Reduction Act and the Chips and Science Act are fueling domestic manufacturing and R&D efforts in semiconductors, advanced sensors, and energy storage solutions. These policies are reshaping supply chains and spurring investment in homegrown capabilities, providing a more secure foundation for IoT-driven energy innovation. As a result, energy stakeholders are forging collaborations with local technology providers and research institutions to capitalize on these incentives and strengthen resiliency against geopolitical disruptions.

On the market front, new business models are emerging to harness the full potential of IoT-enabled assets. Demand response programs, once limited to large industrial facilities, are expanding to residential and small commercial customers through residential gateways and integrated software platforms. By aggregating distributed loads and leveraging two-way communication networks, utilities can now dynamically balance grid supply and demand, smoothing peak usage curves while delivering new revenue streams for end users. These transformative applications illustrate how IoT insights are redefining value exchange across the energy ecosystem, empowering consumers with unprecedented control over their energy consumption patterns.

Ultimately, the timely convergence of technological breakthroughs, regulatory incentives, and innovative market models is driving energy infrastructure toward a more decentralized, automated, and responsive paradigm. Those organizations that embrace this confluence of forces stand to achieve enhanced operational agility, optimized asset utilization, and differentiated customer experiences in an increasingly complex energy landscape.

In early 2025, the U.S. government enacted sweeping tariff measures that have reverberated across global supply chains for energy equipment and IoT components. Effective March 12, a 25% levy on steel and aluminum imports was introduced under Section 232 provisions, extending to derivative products and affecting vital infrastructure materials for transformers, switchgear, and enclosure systems. Concurrently, a 10% surcharge on goods from China and Hong Kong took effect in March, layering additional duties on hardware components widely used in IoT sensors and gateways.

Beyond metals, the administration broadened its scope to include strategic electronics components later in the spring. A 25% tariff was imposed on semiconductors and microchips sourced from certain overseas fabs, alongside a 20% duty on lithium-ion batteries and power storage modules. These measures have escalated costs for hardware OEMs and subsystem integrators, leading many to reassess supplier portfolios and accelerate localization efforts for critical components. Imports of grid-scale batteries, which rely on specialized cell chemistries, have become especially constrained, posing challenges for energy storage deployments and microgrid projects.

The cumulative impact of these tariffs extends to the broader IoT ecosystem. High-turnover devices such as asset trackers, environmental sensors, and smart meters have seen component price increases of up to 50% in some segments, owing to the confluence of metal, semiconductor, and electronics duties. As frequency traders have observed, the cost dynamic threatens to slow adoption rates for IoT-enabled monitoring solutions, particularly in cost-sensitive infrastructure projects and retrofit programs where margins are already tight.

In response to rising duties, companies are exploring supply chain realignment strategies. Some device manufacturers are decoupling software from hardware, shipping “dumb” hardware assemblies to avoid higher tariff bands and conducting firmware installations domestically to minimize the dutiable value. Others are diversifying production footprints toward alternative low-tariff jurisdictions in Southeast Asia and Latin America. Meanwhile, distributors and systems integrators are collaborating closely with OEMs to secure exclusions and revocations for critical product lines. These adaptive strategies underscore the intricate balancing act energy stakeholders must perform to maintain cost competitiveness and project viability amid an evolving tariff regime.

The IoT energy landscape can be dissected through a multi-dimensional lens encompassing offering, application, connectivity, end user, and deployment model. From an offering perspective, the market is stratified into hardware, services, and software. Hardware elements range from controllers and gateways to meters and an evolving array of sensors-current sensors, environment sensors, and specialized metering sensors-that collectively orchestrate data acquisition and control. Services encompass consulting, system integration, and ongoing support and maintenance, each essential to unlocking the full value of IoT deployments. In parallel, software capabilities span analytics, application software, and platform solutions; predictive analytics and real-time analytics propel actionable insights, while IoT and management platforms serve as the digital backbone for orchestrating device lifecycles and data flows.

Examining application segmentation reveals targeted use cases such as asset tracking, demand response management, grid monitoring and management, and smart meter management. Within demand response, both industrial and residential programs leverage advanced communication protocols and data analytics to orchestrate load shifts, optimizing grid stability and delivering financial incentives to participants. Grid monitoring harnesses real-time telemetry and anomaly detection to mitigate risks and enhance outage management, while smart meter management focuses on data aggregation, customer engagement, and billing accuracy.

Connectivity technologies underpinning these offerings and applications are equally diverse. Cellular networks, low-power wide-area networks-including LoRaWAN, NB-IoT, and Sigfox-and short-range links like Bluetooth Low Energy and Zigbee each satisfy unique criteria for range, bandwidth, and power consumption. These protocols enable devices to communicate efficiently, from remote substations to building automation systems, balancing performance with operational longevity.

End-user segmentation spans commercial, industrial, residential, and utilities domains. Commercial facilities seek to optimize energy costs and sustainability metrics, industrial operators prioritize process uptime and regulatory compliance, residential users demand intuitive interfaces and energy insights, and utilities focus on holistic grid performance and regulatory reporting. Each constituency brings distinct requirements, driving tailored product and service portfolios.

Finally, deployment models bifurcate into cloud and on-premises architectures. Cloud deployments offer scalability, rapid feature updates, and seamless integration with enterprise systems, while on-premises solutions appeal to organizations with stringent data sovereignty, latency, or security mandates. The interplay among these dimensions shapes the competitive landscape, guiding vendors and end users toward the most appropriate IoT energy solutions.

Regional dynamics in the IoT energy sector reflect divergent regulatory frameworks, infrastructure maturity, and investment climates. In the Americas, robust incentives under federal and state-level programs have catalyzed renewable integration and grid modernization projects. North American utilities are deploying advanced distribution management systems and investor-owned energy storage programs, while Latin American markets are investing in rural connectivity solutions to extend microgrid and community solar initiatives.

Europe, the Middle East, and Africa (EMEA) present a mosaic of regulatory drivers and adoption curves. The European Union’s stringent decarbonization targets and cross-border interconnection projects have accelerated smart grid rollouts and energy management platforms. In the Middle East, sovereign wealth funds are channeling investment into digital substations and predictive maintenance for oil and gas infrastructure. African nations are piloting LPWAN-based microgrids to bring electrification to off-grid communities, leveraging solar-plus-storage with remote monitoring and control.

Asia-Pacific continues to lead in scale and innovation, fueled by rapid urbanization, manufacturing expansion, and government-led infrastructure programs. Countries such as China and India are integrating millions of smart meters annually, while Southeast Asian markets explore 5G-enabled demand response applications for commercial buildings. Australia’s evolving energy market structure has spurred distributed energy resource management systems for residential and commercial prosumers, showcasing how regulatory reform can open pathways for IoT-enabled flexibility services.

These regional distinctions underscore the importance of tailoring IoT strategies to local contexts. By aligning technology roadmaps with regional policy mandates, infrastructure readiness, and stakeholder priorities, energy organizations can optimize deployments and maximize return on investment across geographies.

Leading technology and energy companies are forging new paths to capitalize on IoT’s promise. Schneider Electric’s multi-year initiative to build an AI-native ecosystem for sustainability and energy management underscores the shift toward agentic AI platforms that can autonomously orchestrate complex workflows. By integrating these AI agents into adaptive energy management software, the company aims to transform discrete applications into an intelligent, unified system that continuously optimizes decarbonization strategies and resource usage. Their partnership with Nvidia to develop AI-optimized data center reference architectures further highlights this strategic emphasis on co-innovation for high-demand environments, targeting up to 132 kilowatts per rack with significant energy and time savings.

ABB’s strategic moves indicate a parallel focus on open innovation and service-based models. The introduction of Battery Energy Storage Systems-as-a-Service (BESS-as-a-Service) reflects ABB’s commitment to lowering the barriers for clean energy adoption by shifting cost structures from capital expenditure to operational expenditure. By offering turnkey storage solutions with performance guarantees and lifecycle support, ABB is positioning itself as a trusted partner for industries seeking rapid deployment of energy storage without upfront investment. Additionally, ABB’s Startup Challenge continues to mine fresh ideas from early-stage companies, co-developing AI-driven tools for emissions tracking and battery optimization to expand its platform ecosystem.

Siemens is staking its claim in the energy IoT domain through advancements in industrial AI and digital twins. At CES 2025, the company unveiled its Industrial Copilot for Operations, embedding AI capabilities directly on the shop floor to drive real-time decision-making and minimize downtime. This drive toward human-machine collaboration on the factory floor illustrates Siemens’s strategy to deliver end-to-end digital solutions that span from edge devices to cloud-based analytics while maintaining robust localized supply chains to mitigate trade tensions.

Collectively, these incumbent and emerging players are converging on cross-disciplinary approaches-combining hardware innovation, software intelligence, and flexible service models-to address the complex requirements of modern energy systems. Their dynamic investments and partnerships signal a strategic pivot from point solutions to integrated, platform-driven business models that can scale with evolving industry needs.

To harness the full potential of IoT in energy, executives must craft a holistic strategy that aligns technology adoption with organizational goals. First, prioritize interoperability by selecting platforms and protocols that integrate seamlessly with existing SCADA, ERP, and asset management systems. A modular architecture that supports open APIs will enable incremental innovation and safeguard against vendor lock-in.

Next, develop a comprehensive data governance framework that outlines clear ownership, security, and privacy protocols. As IoT device volumes surge, robust policies for data classification, access control, and lifecycle management become critical to satisfy regulatory requirements and build stakeholder trust. Invest in zero-trust network architectures and machine identity management to proactively mitigate cyber risks.

Capital allocation should emphasize pilot programs that demonstrate quick wins in predictive maintenance, energy efficiency, or demand response. These early use cases can validate technology choices, quantify ROI, and create momentum for broader rollout. At the same time, embed change management practices-reskilling the workforce and aligning cross-functional teams-to ensure adoption and operational excellence.

Finally, forge partnerships across the IoT ecosystem, including device vendors, platform providers, and research institutions. Collaborative innovation networks accelerate time-to-market for new solutions, unlock synergies in R&D, and provide access to specialized expertise. By cultivating these strategic alliances, organizations can navigate evolving regulatory landscapes and rapidly scale IoT-driven business models for sustained competitive advantage.

This research utilizes a multi-source methodology to ensure comprehensive and unbiased insights. Primary data was collected through structured interviews and workshops with energy industry executives, IoT solution providers, and regulatory experts. These qualitative engagements were complemented by technology demonstrations and site visits to utility and commercial installations leveraging advanced IoT architectures.

Secondary research encompassed an extensive review of peer-reviewed journals, industry publications, and government documents to contextualize emerging trends and regulatory developments. Publicly available patent filings and technical standards were analyzed to map the innovation landscape for IoT hardware, connectivity protocols, and software platforms.

Data synthesis employed a triangulation approach, cross-verifying findings from primary and secondary sources to enhance reliability. Analytical frameworks such as SWOT analysis and value chain mapping were used to identify key drivers, challenges, and competitive dynamics. Validation was conducted through expert panels and advisory board reviews, ensuring that the conclusions are robust, actionable, and aligned with real-world operational requirements.

IoT is fundamentally reshaping how energy systems are designed, managed, and optimized. From the proliferation of edge-driven analytics to the emergence of service-based deployment models, the industry is pivoting toward agile, data-centric approaches that enhance reliability and sustainability. The segmentation analysis reveals the nuanced requirements across hardware, services, software, and deployment preferences, highlighting the need for tailored strategies that address end-user priorities.

Regional insights underscore the importance of aligning IoT initiatives with local regulatory frameworks and market maturity, ensuring that deployments resonate with stakeholder expectations and policy incentives. Major players like Schneider Electric, ABB, and Siemens are converging on integrated platform strategies, underpinned by AI and flexible service offerings, to deliver holistic energy management solutions.

However, the evolving tariff environment presents both challenges and opportunities, prompting organizations to adopt supply chain realignment and innovative cost-mitigation tactics. By blending strategic partnerships, robust data governance, and iterative pilot programs, energy leaders can navigate these headwinds and unlock new value streams.

Collectively, these findings emphasize the imperative for decision makers to embrace an end-to-end IoT strategy that balances technological innovation, operational resilience, and regulatory compliance. This multi-faceted approach will catalyze the next phase of energy evolution, empowering stakeholders to meet the demands of an increasingly digital and decentralized energy ecosystem.

To embark on a data-driven journey into the future of energy and IoT, reach out to Ketan Rohom, Associate Director of Sales & Marketing. Engaging with Ketan will provide tailored insights on how this research aligns with your organization’s strategic priorities. With an in-depth understanding of IoT energy drivers, Ketan can guide you through the report’s structure, highlight critical findings, and demonstrate how these insights translate into actionable business outcomes. Prepare to accelerate your decision-making process with expert support, ensuring you leverage the latest IoT innovations in the energy sector. Connect with Ketan today to secure your copy of the comprehensive market research report and transform your strategic roadmap with confidence.