  The Internet of Things (IoT) paradigm brings an opportunity for advanced
Demand Response (DR) solutions. It enables visibility and control on the
various appliances that may consume, store or generate energy within a home. It
has been shown that a centralized control on the appliances of a set of
households leads to efficient DR mechanisms; unfortunately, such solutions
raise privacy and scalability issues. In this chapter we propose an approach
that deals with these issues. Specifically, we introduce a scalable two-levels
control system where a centralized controller allocates power to each house on
one side and, each household implements a DR local solution on the other side.
A limited feedback to the centralized controller allows to enhance the
performance with little impact on privacy. The solution is proposed for the
general framework of capacity markets.
