  In order to efficiently provide demand side management (DSM) in smart grid,
carrying out pricing on the basis of real-time energy usage is considered to be
the most vital tool because it is directly linked with the finances associated
with smart meters. Hence, every smart meter user wants to pay the minimum
possible amount along with getting maximum benefits. In this context, usage
based dynamic pricing strategies of DSM plays their role and provide users with
specific incentives that help shaping their load curve according to the
forecasted load. However, these reported real-time values can leak privacy of
smart meter users, which can lead to serious consequences such as spying, etc.
Moreover, most dynamic pricing algorithms charge all users equally irrespective
of their contribution in causing peak factor. Therefore, in this paper, we
propose a modified usage based dynamic pricing mechanism that only charges the
users responsible for causing peak factor. We further integrate the concept of
differential privacy to protect the privacy of real-time smart metering data.
To calculate accurate billing, we also propose a noise adjustment method.
Finally, we propose Demand Response enhancing Differential Pricing (DRDP)
strategy that effectively enhances demand response along with providing dynamic
pricing to smart meter users. We also carry out theoretical analysis for
differential privacy guarantees and for cooperative state probability to
analyze behavior of cooperative smart meters. The performance evaluation of
DRDP strategy at various privacy parameters show that the proposed strategy
outperforms previous mechanisms in terms of dynamic pricing and privacy
preservation.
