Energy Monitoring System: How It Works and Submetering

An energy monitoring system measures how much electricity (and often gas, water, or steam) a building or plant uses, where it is used, and when. Meters and sensors take the readings, a gateway or network carries them to a software platform, and the platform turns them into dashboards, alerts, and reports that people can act on.

The electricity bill for a mid-size plant arrives, and the demand charge is higher than last month. The utility meter reports one total and one peak for the whole site, so nobody can say what caused it. It could be the new air compressor, a chiller someone left in manual, or two production lines starting in the same minute on Monday morning. With a meter on each of those loads, finding the answer takes a few minutes instead of a week of guessing.

This guide covers the parts of an energy monitoring system, what submetering is and where it pays off, the metrics worth tracking, the standards that rely on metered data, and how to start a project. It's written for facility and energy managers, system integrators, and meter manufacturers. If you already have meters and want one place to collect their data under your own brand, see how the Cloud Studio IoT platform works.

What Is an Energy Monitoring System?

An energy monitoring system combines metering hardware, communications, and software to record energy use at regular intervals. The important word is interval. A utility bill gives you one number a month; a monitoring system gives you a reading every few minutes for every point you measure, so you can see the shape of consumption across a day, a shift, or a week.

Most commercial and industrial projects start with electricity, because it changes fastest and is often billed on both consumption and demand. The same system can also read gas, water, steam, and thermal energy meters. Four terms often get confused:

What IoTITermIoT (Internet of Things)The IoT (Internet of Things) is the network of physical objects with sensors, software and connectivity that collect and exchange data and act autonomously.View profile changed is the cost of each measurement point. Wireless meters, LoRaWANProtocolLoRaWANOpen long-range, low-power LPWANView profile pulse readers, cellular gateways, and cloud platforms mean a site no longer needs dedicated wiring from every meter to a control room. That is usually what people mean by IoT for energy: more points, installed faster, with data that reaches the people who need it.

Components of an Energy Monitoring System

Meters and Submeters

The utility meter belongs to the utility and measures the whole site. Submeters are meters you own, installed downstream to measure part of the load: a panel-mounted multifunction meter, a DIN-rail meter on one circuit, or a branch-circuit monitor that reads dozens of breakers in a panel through small CTs.

If you will bill tenants with the data, choose revenue-grade meters. In North America they are specified against the ANSI C12.20 accuracy classes, and in Europe and many other markets against the IEC 62053 series. For monitoring alone, a lower accuracy class is usually enough.

CT Clamps and Current Sensors

A current transformer (CT) measures current through the magnetic field around a conductor, so you don't cut the cable. Split-core CTs and flexible Rogowski coils close around existing conductors, which makes retrofits easier; solid-core CTs need the conductor disconnected, so they suit new panels. The CT must match the meter input, typically a 5 A or 1 A secondary or a low-voltage output such as 333 mV.

Measuring power also takes a voltage reference, because the meter multiplies voltage and current sample by sample. A current-only sensor has to assume voltage and power factor, which is fine for knowing when a machine runs but not for energy accounting.

One safety rule: never leave the secondary of a current-output CT open while the conductor is energized, because it can develop dangerous voltages. Panel work belongs to a qualified electrician and must follow the local electrical code.

Pulse Outputs

Many existing meters have a pulse output: a contact that closes once per fixed amount of energy, the pulse weight (one pulse per watt-hour, or per 10 kWh, depending on the meter). In North America it is often a KYZ output, and in Europe an S0 output. A pulse counter or an IoT device with a pulse input turns pulses into consumption, and water and gas meters often have them too. Pulses only carry energy, so you get no voltage, power factor, or phase data.

Modbus Meters

Multifunction meters usually publish readings over ModbusMProtocolModbusThe most widespread industrial fieldbusView profile RTU on an RS-485 bus or Modbus TCP over Ethernet. One RS-485 bus can chain many meters, each with its own address. Every vendor publishes a register map, and the details matter: data type, scaling, and word order change between models, and a wrong word order turns 230 V into a meaningless number.

Gateways and Connectivity

A gateway reads local meters (Modbus, pulses, M-Bus, BACnetBProtocolBACnetOpen protocol for building automation (HVAC)View profile) and forwards the data, usually over MQTTProtocolMQTTThe standard pub/sub protocol of IoTView profile or HTTPS, storing readings while the connection is down. Wireless meters save the cabling: LoRaWAN meters send data through LoRaWAN gatewaysLHardwareLoRaWAN GatewaysLoRaWAN gateways: SX1302/1303 chipsets, indoor vs outdoor units, Network Server (ChirpStack, TTN), packet forwarder and how to build your own.View profile and a network server, and cellular meters (LTE-MLProtocolLTE-MCellular IoT with mobility and voiceView profile, NB-IoTProtocolNB-IoT3GPP-standardized cellular LPWAN — carrier coverageView profile) connect straight to the carrier. The guide to IoT sensors and protocols covers each option, and the MQTT broker guide explains the publish and subscribe model most platforms use.

The Platform

The platform keeps the history and organizes it as a hierarchy: site, building, panel, circuit, meter. On top come dashboards for each role, alerts, reports, and APIs for billing, ERP, or BMS software. People underestimate the hierarchy. If the platform doesn't know that meter 14 hangs from panel B and feeds the chiller plant, you can't roll consumption up or compare like with like. For how readings travel from the field to a platform, see what telemetry is.

What Is Submetering and Where Does It Pay Off?

Submetering means installing meters after the main utility meter to measure energy use for a specific tenant, floor, building system, circuit, or machine. The utility meter tells you how much the whole site used; submeters tell you who or what used it. The U.S. General Services Administration describes submeters as additional meters that measure consumption in more detail, often used to allocate costs in multi-tenant, commercial, and industrial buildings.

GSA describes submetering at several levels, from the whole building down to building systems (lighting, heating, cooling), panels or circuits, and single pieces of equipment such as a chiller or a pump. It also points out that the meter itself doesn't save energy. Savings come from people acting on the data, which is why alerts and reports matter as much as the hardware.

Tenants and Multi-Tenant Buildings

Offices, shopping centers, and industrial parks split one utility bill among tenants. Splitting it by floor area penalizes efficient tenants and hides waste. Submeters bill each tenant for what it used and give tenants a reason to save. Rules for billing tenants from submeters differ by state and country, so check what the regulator requires, including meter accuracy, before the first invoice.

Production Lines

In a plant, the useful unit is energy per unit produced: kWh per ton, per part, or per batch. Metering each line or large machine lets you compare shifts and products, catch a compressor running all Sunday with production stopped (usually a compressed-air leak), and see which equipment sets the monthly peak. A motor drawing more current for the same output can also point to a mechanical problem.

HVAC and Central Plants

HVAC is often one of the largest loads in a commercial building. Metering chillers, boilers, air handlers, and pumps separately shows equipment running outside occupied hours, heating and cooling fighting each other, and plant efficiency drifting over time. For building-wide projects, see smart building solutions. Sites with rooftop solar or batteries also need meters on generation and storage, or the net reading at the main meter hides what the building consumed; see solar energy monitoring.

Energy Monitoring Metrics: kWh, kW Demand, Power Factor, and Peaks

People mix up kWh and kW all the time. kWh is energy, the amount used; kW is power, the rate of use. A 100 kW load running for two hours uses 200 kWh. Utilities that bill demand look at the highest average kW within a short interval, so two chillers and a furnace starting together at 7:00 can cost more than the same equipment started 20 minutes apart.

Power factor deserves its own alert. Motors and transformers draw reactive power, which loads cables without doing useful work. Capacitor banks correct it, and an energy monitoring system shows a failed capacitor stage before the utility bill does. Baseload is often the quickest place to look: compare consumption at 3:00 on a Sunday with the production schedule, and anything running without a reason goes on the to-do list.

Standards and Regulations That Rely on Energy Monitoring

You don't need a regulation to justify metering, but several frameworks assume you have metered data, and some make it mandatory for large consumers.

ISO 50001

ISO 50001 is the international standard for energy management systems. It follows a plan, do, check, act cycle: review how energy is used, identify significant energy uses, set baselines and energy performance indicators, and plan how energy data will be collected. In the United States, the Department of Energy runs 50001 Ready, a self-paced, no-cost program for facilities that implement an ISO 50001-based energy management system without external audits or certification.

ENERGY STAR Portfolio Manager

ENERGY STAR Portfolio Manager is the benchmarking tool that nearly 25% of U.S. commercial building space already uses. Many buildings can receive a 1 to 100 ENERGY STAR score, where 50 is the median, and a score of 75 or higher may qualify for certification. Portfolio Manager starts from utility bills; an energy monitoring system adds the interval and submeter detail you need to explain why a building scores the way it does.

U.S. Federal Metering Guidance

The Energy Policy Act of 2005 requires the Department of Energy to set guidelines for agencies to meter federal buildings for electricity, natural gas, steam, and water. The Federal Energy Management Program (FEMP) publishes that guidance, last updated in October 2022, with templates and best practices that private owners can borrow.

EU Energy Efficiency Directive

In the European Union, the recast Energy Efficiency Directive (EU) 2023/1791 makes energy management systems mandatory for large energy consumers and extends energy audits to every company above a consumption threshold, whatever its size. Member states had until 11 October 2025 to transpose it. Both are far easier to run on metered data than on bills alone.

How to Size and Start an Energy Monitoring System

1. Write Down the Questions First

Tenant billing, demand reduction, ISO 50001, and maintenance each need different meters, accuracy, and intervals. List the decisions the data will support and who will make them.

2. Map the Loads

Start from the single-line diagram and a year of utility bills. Rank loads by size and variability, and meter the largest and most variable first: HVAC plants, compressors, ovens, and process lines are the usual candidates.

3. Choose Metering Points, Meters, and Interval

Use revenue-grade meters where you will bill, branch-circuit monitors where you need many circuits in one panel, pulse outputs to reuse existing meters, and wireless meters where cable would cost more than the meter. Log at least as often as your tariff's demand interval, so the system can rebuild the utility's peak.

4. Plan Installation and Communications

Check panel space, network access, and cellular or LoRaWAN coverage at each mounting point. Many CT installations need a shutdown or an energized-work permit, so plan them with maintenance windows. Label every CT and meter with its circuit, because a mislabeled meter produces confident, wrong reports.

5. Configure, Validate, and Pilot

Build the hierarchy and check that the submeters add up to the main meter within a reasonable margin. Set alerts for demand approaching the month's peak, low power factor, and consumption outside working hours. Pilot one building or line for a full billing cycle before scaling.

What Drives the Cost

There's no list price, because cost depends on how many points you meter and how hard they are to reach. Price each line item separately:

In retrofits, labor and shutdowns can cost as much as the hardware, which is why split-core CTs and wireless meters are popular there. Compare offers by cost per metering point per year, and weigh that against demand charges, tenant disputes, and consumption outside hours. The energy management solution shows how the pieces fit in a project.

Where Cloud Studio IoT Fits: IoT for Energy Monitoring

Cloud Studio IoT is a white-label IoT platform. Device manufacturers, system integrators, and service operators use it to deliver energy monitoring to their customers under their own brand. It is the platform layer of the system and connects to meters this way:

• over MQTT, with a dedicated MQTT server per instance and TLS encryption, or through its HTTP API;
• with Modbus meters and other industrial equipment through a software gateway we install at the edge, which sends the data to the platform securely over MQTT;
• with LoRaWAN meters and pulse readers through the network server you already use, with integrations for The Things Stack, LORIOT, ThingPark X, Helium, ChirpStackCTermChirpStackChirpStack is an open-source LoRaWAN Network Server to deploy and manage private end-to-end LoRaWAN networks.View profile, and Orbiwise. Cloud Studio IoT integrates with your network server instead of operating one; the guide to LoRaWAN network servers explains that role.

The platform's energy monitoring vertical lets you define electrical circuits as a hierarchy, with phase type and consumption category. You add energy meters and devices for other electrical variables (voltage, current, power, cos φ), view them in dashboards and in the real-time device monitor, and create alerts when an electrical parameter goes outside its limits. Meters can report accumulated active energy (Wh) and reactive energy (VARh) through the documented MQTT and HTTP integrations, and the Reports section includes detailed and summary energy consumption reports in PDF or Excel.

Each end customer sees only its own data through permission-based multi-tenant separation. The cloud service runs on AWS, the platform can also be installed on-premise, and it has more than 150,000 connected devices across its deployments.

Key Takeaways

• An energy monitoring system is meters, communications, and a platform, and each can be chosen separately.
• Submetering shows who or what used the energy, which the utility meter can't.
• Track kWh, kW demand, peaks, power factor, and baseload, with alerts on each.
• Budget per metering point per year, including installation and operations.

If you are planning an energy monitoring project, talk to the team and bring your single-line diagram, your list of meters, and the questions you want the data to answer.

Frequently Asked Questions

What is the difference between a meter and a submeter?

The main meter is owned by the utility and measures everything the site consumes, because that is what the utility bills. A submeter is a meter you install after the main meter to measure part of the load: a tenant, a floor, a production line, an HVAC system, or a single machine. The utility bill stays the same; submeters show where it comes from.

What does an energy monitoring system measure?

At minimum, energy in kWh over time. Most commercial systems also measure power in kW, peak demand, voltage and current per phase, power factor, and frequency, and many read gas, water, and steam meters. From those readings the platform calculates baseload, consumption outside working hours, and energy intensity, such as kWh per unit produced.

Is submetering legal for billing tenants?

It depends on where the building is. States, provinces, and national regulators set their own rules for billing tenants from submeters, and those rules differ on what you can charge and how. Before you invoice anyone, check with the utility regulator and use meters of the accuracy class it requires. Submetering only to monitor your own facility doesn't raise the same questions.

How is IoT used in energy monitoring?

IoT lowers the cost of each measurement point. Meters and sensors send data over MQTT, HTTP, LoRaWAN, or cellular networks instead of dedicated wiring, gateways translate industrial protocols such as Modbus, and a cloud or on-premise platform collects everything in one place. You measure more points, install them faster, and share dashboards, alerts, and reports with everyone who needs them.

Are home energy monitors the same as commercial systems?

They work on the same principle: CT clamps on the incoming conductors and software that shows consumption. Commercial and industrial systems measure many more points, use three-phase meters, often need revenue-grade accuracy for tenant billing, and integrate with Modbus meters, building systems, and billing software. They also need permissions for many users and, for service providers, many customers.

How much does an energy monitoring system cost?

There's no single price. Cost depends on the number of metering points, the meter types and accuracy, how hard installation is (shutdowns, panel space, cable runs), connectivity, the platform, and integration with billing or building systems. Ask vendors for a breakdown by line item and compare offers by cost per metering point per year over the life of the project.