AbstractIn smart grid networks, the advanced metering infrastructure (AMI) enables sensors and communication networks to measure electricity consumed or generated by users. However, among the challenges to be overcome related to security in the AMI system is resistance to computer attacks, such as impersonation, denial of service, man in the middle, and redirection, which can compromise privacy, confidentiality, and availability of electrical systems. An efficient and effective authentication system is necessary to guarantee the privacy and confidentiality of data without compromising system performance, thus characterizing a challenge (need for a tradeoff between security and performance), which involves limited computing power and bandwidth and a high number of meters to be installed in a certain geographic area. This article introduces a group authentication and key agreement protocol that ensures both confidentiality and privacy of communications and avoids several computer attacks. It showed better communication and computational cost‐based performance compared to other protocols. Automated validation of internet security protocols and applications formally validated it, while security protocol animator tool simulated an intrusion, with good results.