In this paper, we present a distributed incremental data aggregation approach, in which data aggregation is performed at all smart metres involved in routing the data from the source metre to the collector unit. With a carefully constructed aggregation tree, the aggregation route covers the entire local neighbourhood or any arbitrary set of designated nodes with minimum overhead. To protect user privacy, homomorphic encryption is used to secure the data enroute. Therefore, all the metres participate in the aggregation, without seeing any intermediate or final result. In this way, our approach supports efficient data aggregation in smart grids, while fully protecting user privacy. This approach is especially suitable for smart grids with repetitive routine data aggregation tasks.