A detailed understanding of the interaction between electrons and light at the nanoscale is used to gain insight into the wide range of plasmonic phenomena observed experimentally for the exploration of novel applications in nanotechnology. In particular, the decay of the plasmon excitation into energetic electrons and holes has been proposed as a promising energy conversion mechanism with applications in photovoltaics and photocatalysis. In the first part of this thesis a material-specific quantum model is introduced for both the plasmon and the electrons in a metallic nanoparticle. For the description of the optical properties of the nanoparticle we use linear response time-dependent density functional theory while the decay of the plasmon into energetic carriers is described using many-body perturbation theory. We find that hot-carrier generation rates differ significantly from semiclassical predictions, which treat the plasmon as a classical dipole field induced by the charge oscillation on the surface of the nanostructure. We also study the decay of non-plasmonic excitations, such as electron-hole pairs, and find that they can result in similar hot-carrier generation rates as plasmonic excitations. This quantum model can also capture both the external screening induced by the dielectric environment surrounding the nanoparticle and the internal screening induced by the polarizable d-band electrons. This is achieved by using an effective screened electron-electron interaction that modifies the calculation of the electron-plasmon coupling as well as the plasmon resonance. We present results for silver nanoparticles embedded in five different dielectrics (air, SiO2, SiN, TiO2 and GaP) and predict that large generation rates can be achieved by choosing a host material that shifts the localised plasmon energy such that it coincides with the maximum in joint density of states. Also, a large number of relatively low-energy carriers are obtained by embedding in strongly screening environments, such as GaP. In the second part of the thesis, a semiclassical approach is introduced to study the contribution of the d-bands to the generation of plasmon-induced hot carriers in noble metals. This description combines atomistic and continuum theories using the envelope function technique. Fermi’s golden rule is applied to calculate the plasmonic hot-carrier rates due to transitions either from a d-band state to an sp-band state (interband transition) or from an sp-band state to another sp-band state (intraband transtion). We apply this formalism to silver nanoparticles with radii up to 20 nm. We find that for small nanoparticles intraband transitions dominate while interband transitions give the largest contribution for larger nanoparticles.