Efficiency-Fairness Trade-off in Privacy-Preserving Autonomous Demand Side Management

Demand side management (DSM) programs are designed to encourage users to shift the use of their non-critical appliances to off-peak hours. Autonomous DSM programs have recently been proposed to achieve this goal by coordinating the users´ energy consumption, using smart meters. On the other hand, this objective can be achieved only when the users actively contribute in DSM programs. Devising a fair billing mechanism is important to encourage the users to keep their contribution in the programs to achieve system optimality in the sense of minimum cost of the system. Another important issue in implementing DSM programs is protecting the users´ privacy which is short addressed in DSM literature. In this paper, we introduce the concept of fairness, optimality and privacy in DSM systems. Next, we introduce a class of optimal billing mechanisms. We propose a subclass of optimal billing mechanisms which is fair in terms of distributing the energy cost across the users based on their contribution in minimizing the total cost of system. We show that fairness axioms which have been previously introduced in resource allocation algorithms are achievable in the proposed billing subclass. Next, we apply the secure sum algorithm to protect the users´ privacy in implementing this billing mechanism.