Cost-Effective and Privacy-Preserving Energy Management for Smart Meters

Smart meters, designed for information collection and system monitoring in smart grid, report fine-grained power consumption to utility providers. With these highly accurate profiles of energy usage, however, it is possible to identify consumers' specific activities or behavior patterns, thereby giving rise to serious privacy concerns. This paper addresses these concerns by designing a cost-effective and privacy-preserving energy management technique that uses a rechargeable battery. From a holistic perspective, a dynamic programming framework is designed for consumers to strike a tradeoff between smart meter data privacy and the cost of electricity. In general, a major challenge in solving dynamic programming problems lies in the need for the knowledge of future electricity consumption events. By exploring the underlying structure of the original problem, an equivalent problem is derived, which can be solved by using only the current observations. An online control algorithm is then developed to solve the equivalent problem based on the Lyapunov optimization technique. It is shown that without the knowledge of the statistics of the time-varying load requirements and the electricity price processes, the proposed online control algorithm, parametrized by a positive value V, is within O(1/V) of the optimal solution to the original problem, where the maximum value of V is limited by the battery capacity. The efficacy of the proposed algorithm is demonstrated through extensive numerical analysis using real data.