The appearance of the terminal system of electric power Internet of Things has brought a lot of convenience to the electric power industry, but at the same time it is also facing increasingly severe network security challenges. In order to ensure the safety and confidentiality of power data, it is necessary to adopt high-intensity encryption technology. However, lightweight cryptography has attracted wide attention because of its smaller and more efficient features. The purpose of this experiment is to verify the application effect of lightweight cryptography technology in power IOT terminal system. Ten IOT terminal devices are selected, and their encryption and decryption tests are carried out under the condition that they adopt traditional encryption algorithm and lightweight encryption algorithm. The results show that the lightweight cryptography technology has faster encryption and decryption rate and shorter encryption and decryption time, and has better application performance in the terminal system of power IOT. In addition, some strategies such as strengthening the standardization and normalization of lightweight cryptography, strengthening its attack testing, and establishing a perfect application management and monitoring mechanism are put forward to ensure the security and stability of lightweight cryptography in the terminal system of electric power IOT. Specifically, the average encryption and decryption time of lightweight cryptography is 6.6 ms and 6.7 ms, and the average encryption and decryption rates are 155.2 Mbps and 149.3 Mbps, respectively, while the average encryption and decryption time of traditional algorithms is 7.0 ms and 7.0 ms, and the average encryption and decryption rates are 146.7 Mbps and 139.4 Mbps, respectively. It shows that the lightweight cryptography technology performs better than the traditional algorithm in the terminal system of power IOT.