A $700 million project to build New Zealand’s first hyperscale data centre near Invercargill is underway, with the region’s cool climate, available land and renewable energy identified as valuable attributes that could make Southland a major hub for the booming global data industry. 

Datagrid, headed by Hawaiki Cable founder Remi Galasso and Callplus Ltd founder Malcolm Dick, is planning the construction of a 60 megawatt, 25,000 square metre facility near the town of Makarewa. It is anticipated to scale to a 100 megawatt, 40,000 square metre facility within several years, covering an area of more than five rugby fields and consuming as much power as a town of 80,000 people.

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Galasso says the data centre will add value to New Zealand by driving growth, generating employment and supporting the country’s digital economy. In Iceland, where government incentives and renewable energy have attracted data centres for years, they already contribute around 1% of the country’s GDP. 

“The only hyperscale data centre currently servicing New Zealand is based in Australia, but Southland’s climate makes it 15% cheaper to power a data centre of this size compared with Australia. These savings, along with New Zealand’s well-educated workforce and long term political stability make Southland highly attractive as a location for global companies to safely store their data,” Galasso says.  

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Dick says companies like Google, Apple, Facebook, Microsoft and Amazon are committed to powering as many of their data centres as possible from renewable energy. Globally, the demand for data centres is growing so fast that by 2030 they are expected to consume around 8% of the world’s electricity.

“Until now, the lack of international connectivity into New Zealand has been a limiting factor for establishing data centres, but with the arrival of the Hawaiki Cable in 2018 that barrier can finally be lifted,” Dick says. 

A significant part of the $700m project involves laying a new submarine cable to connect Invercargill directly to the east coast of Australia, a shorter distance than between Auckland and Australia. It also involves laying a domestic festoon cable to connect Invercargill with cities on New Zealand’s east coast.

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Galasso says this connectivity will give the data centre access to a serviceable market of around 20 million people across New Zealand, Victoria, New South Wales and parts of Queensland.  

Latency between Invercargill Australia will be around 24 milliseconds, well within the upper limit of 35 milliseconds accepted as standard by the industry. Galasso says the country’s remote location is also a competitive advantage, with many companies looking to locate their data away from larger centers which are at greater risk of disruptive events. 

Meridian Energy’s General Manager Generation and Natural Resources, Guy Waipara, says the Datagrid project demonstrates how New Zealand’s strong advantage in renewable energy can deliver economic benefits over the long term.

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“A low-emissions data centre is a huge opportunity for Southland and all of New Zealand to leverage our abundant clean energy to create high-value jobs and diversify our economy even more into the digital space.

“This project complements the power which will be available from the Manapōuri station after the exit of New Zealand Aluminium Smelters at Tiwai, and it’s great that the demand for it will remain in Southland,” Waipara says.