Cloud computing services rely on electricity to power compute-servers, network\r\nequipment, cooling systems, and other supporting infrastructure. As such, energy\r\ncosts are a substantial outgoing to public providers of cloud computing services.\r\nOn-demand pricing, where consumers are not required to give advance notice of\r\nrequirements, does not aid the provider in planning future demand, and therefore\r\nmakes it more difficult to purchase energy at discounted rates. In this paper, we\r\npropose an advance pricing mechanism for cloud computing resources based on\r\nprovision-point contracts, commonly used by deal-of-the-day websites such as\r\nGroupon. We show how our Contributory Provision Point (CPP) contracts reward\r\nconsumers with reduced prices for advance reservations, while allowing providers to\r\nmake accurate forecasts of energy usage. We show how CPP contracts are risk-free\r\nfor the provider, guaranteeing to be at least as profitable as on-demand mechanisms\r\nwhere electricity is purchased ad-hoc by the provider. Through a computer\r\nsimulation, we demonstrate that CPP contracts can be more profitable for the\r\nprovider compared to a traditional method of hedging electricity futures using a\r\npopular forecasting algorithm. Furthermore, we show that CPP contracts encourage\r\nconsumers to forecast honestly by rewarding them with discounted rates, while\r\nremaining profitable for the provider, even when forecasts are not completely\r\naccurate.
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