  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 minimum possible
amount along with getting maximum benefits. In here, 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 of
dynamic pricing algorithms charges 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
and to calculate accurate billing, we 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 extensive theoretical analysis
for differential privacy guarantees and for cooperative state probability to
analyse behaviour 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.
