Contributory Provision Point Contracts - A Risk-Free Mechanism for Hedging Cloud Energy Costs

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Executive Summary

Cloud computing services rely on electricity to power compute-servers, network equipment, cooling systems, and other supporting infrastructure. As such, energy costs are a substantial outgoing to public providers of cloud computing services. On-demand pricing, where consumers are not required to give advance notice of requirements, does not aid the provider in planning future demand, and therefore makes it more difficult to purchase energy at discounted rates. In this paper, the authors propose an advance pricing mechanism for cloud computing resources based on provision-point contracts, commonly used by deal-of-the-day websites such as Groupon. They show how their Contributory Provision Point (CPP) contracts reward consumers with reduced prices for advance reservations, while allowing providers to make accurate forecasts of energy usage.

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