Privacy-Preserving Generation Fraud Detection for Distributed Photovoltaic Systems: A Solar Irradiance-Fused Federated Learning Framework

Federated Learning (FL) has emerged as a promising paradigm for preserving client data ownership and control over distributed Internet of Things (IoT) environments. While discriminative models dominate most FL use cases, recent advances in generative models -- such as Variational Autoencoders (VAE), Generative Adversarial Networks (GAN), and Diffusion Models (DM) -- offer new opportunities for unsupervised anomaly detection in time series analysis, with relevant applications in predictive maintenance (PdM) in critical industrial infrastructures. In this work, we present a comprehensive analysis of VAEs, GANs, and DMs in the context of federated PdM. We analyze their performance and communication overhead under both full and partial federation setups, where only subsets of model components are shared. Building on this analysis, the paper proposes a novel taxonomy for federated generative models that formalizes partial component sharing as a principled mechanism for model personalization. Our experiments over a real-world time series dataset reveal distinct trade-offs in model utility, stability, and scalability, especially in heterogeneous and bandwidth-constrained FL settings. For the evaluated GAN-based configurations, full federation improves training stability relative to independent local training, although the model remains less robust than the VAE- and DDPM-based alternatives. For DMs, however, partial federation -- especially decoder sharing -- can outperform full federation in bandwidth-constrained, non-IID settings.

Financial fraud increasingly exploits institutional boundaries: laundering networks distribute transactions across multiple banks because no single institution can observe the full pattern. Federated Learning (FL) enables collaborative detection without raw data sharing, yet practical deployment in banking environments remains constrained by three pressures. First, homomorphic encryption schemes impose high computational costs that limit real-time aggregation at scale. Second, mask-based protocols such as Google's SecAgg require O(N^2) pairwise key exchanges, which become inefficient as participant count grows. Third, existing protocols provide limited verification that submitted gradient updates are well-formed, leaving aggregation vulnerable to consistency attacks. This paper presents Dynamic Sharded Federated Learning (DSFL), a secure aggregation framework for cross-institution fraud detection. DSFL introduces Dynamic Stochastic Sharding, which partitions participants into small cryptographically ephemeral clusters of fixed size m, reducing communication complexity to O(N*m). Within each cluster, participants submit Linear Integrity Tags, additive-homomorphic commitments that allow the server to verify update consistency without decryption. The mechanism detects inconsistent updates rather than malicious gradients. An Active Neighborhood Recovery protocol handles mid-round dropouts by reconstructing orphaned masks. Experiments on the ULB Credit Card Fraud Detection dataset (284,807 transactions across 10 simulated banking nodes) show that DSFL achieves approximately 34x lower aggregation latency than Paillier-based secure aggregation at N=1000, based on analytical extrapolation from empirical baselines, while maintaining 99% recovery fidelity under a 20% dropout regime. Global fraud recall reached 91.2% (+/-0.8%), above the 68% average of locally trained models.

Training and evaluating false data injection attack (FDIA) detectors for power systems is constrained by data scarcity. Operational grid measurements are commercially sensitive, and hand-crafted attacks fail to capture complex distributional structures imposed by network physics. We present \textsc{GenAI-FDIA}, a framework benchmarking a pool of $P{=}20$ architectures for physics-compliant FDIA synthesis, spanning Wasserstein GANs, MMD-VAEs, normalising flows, diffusion models, and cross-family hybrids. These are evaluated across three IEEE testbeds (14-bus DC, 30-bus DC, and 14-bus AC) under a 60/20/20 chronological split using data-driven Bad Data Detection (BDD) threshold calibration. Our empirical results verify that these models generate high-fidelity attacks, with all architectures achieving evasion rates of $ε_{\text{BDD}} \ge 86.6\%$ on the 14-bus network; additionally, limiting an attacker's topological knowledge induces a measurable degradation in stealthiness ($p \le 0.0022$). Crucially, we identify a previously unreported failure mode: applying affine physics projections directly in normalised feature spaces critically displaces the attack vector, collapsing BDD evasion from ${\sim}55\%$ to $<\!2\%$ on the 30-bus testbed. We resolve this via a novel inference-time harmoniser, restoring full stealthiness ($ε_{\text{BDD}}{=}100\%$) across all physics-informed variants without retraining. Finally, we isolate a covariance-collapse phenomenon ($κ\approx {-}0.076$) within advanced hybrid architectures and rectify it through 50-epoch warm-up schedules ($κ\to 0.785$, $Δ\text{MMD}={-}3.1\%$). Ultimately, \textsc{GenAI-FDIA} delivers a robust recovery blueprint applicable to any physics-constrained generative model deployed for power-system security.