What happened to the Kiwi data centre boom?

Published on the 07/03/2024 | Written by Newsdesk

What happened to the Kiwi data centre boom?

A data centre here, a data centre there…

The first couple of years of the 2020s saw a flurry of data centre announcements for Auckland with big names including Microsoft and Amazon making a big play with their plans for local facilities. Roll on to 2024 and what’s the state of play?

Amazon Web Services announced plans in 2021 for its $7.5 billion AWS Asia Pacific (Auckland) region. AWS ‘chief evangelist’ Jeff Barr said at the time that the facility would open in 2024.

“Work on the development appears to have stalled.”

The region would, AWS informed us, include three interlinked data centres, and the investment would create around 1,000 jobs (though it failed to specify how many of those would be temporary roles for construction of the centre) and add $10.8 billion to the local economy over 15 years.

Early last year AWS brought the right to draw down 51 megawatts of electricity from Mercury Energy for the data centres in a deal AWS said would be more than required at launch.

But with launch due this year, work on the development appears to have stalled after issues around stormwater design, and a fire at the West Auckland site in January.

Reports say while land was cleared for the data centre, and two small artificial wetlands were drained, the property remains empty.

A resource consent application was paused in September 2023 over issues with stormwater design. Amazon is apparently still working with Auckland Council and adjacent landowners.

Auckland Council told RNZ it was not uncommon for resource consent applications to be placed on hold during the consenting process and ‘there is nothing out of the ordinary about this one’.

AWS told iStart this week that it remains committed to launching an AWS region in New Zealand, but said it was not able to share details about the construction or location of the region ‘as this is part of our secure design approach’.

The question of whether there was a new completion date went unanswered by AWS.

Microsoft was the first major hyperscale cloud player to announce plans to build a data centre in New Zealand. It gained consent from the Overseas Investment Office in 2020 to purchase 6.5ha of land for the Auckland build and amid much fanfare (just as accompanied AWS’ announcement), Fonterra and Spark were announced as anchor tenants for the new region.

It says once operational the new facility will create around 50 new FTE jobs, with 300 temporary FTE roles created during the construction of the data centre.

In August 2022 it announced the three New Zealand data centres would be powered by 100 percent carbon free energy from day one, but apart from occasional blasts from Microsoft about new customers signing up for the data centres, little has been revealed about the construction progress. Microsoft did not respond to a request for an update on the work.

But if the big names are faltering, or at least playing coy, others are at least advancing their plans – and in some cases even opening facilities.

ASX-listed data centre company NextDC bought land in Auckland in late 2022 and registered a local subsidiary in preparation for its build of its AK1 Auckland facility – its first data centre on this side of the Tasman.

Announced by the company in May 2023, the facility, which would be located in the Auckland CBD would have total power of 10MW+. NextDC has said work is expected to commence in FY2024 with the site expected to reach ‘practical completion’ of its phase one build in the first half of FY2026.

While it’s listed as ‘in planning’ on NextDC’s website, company financials last year show the facility as being ‘in development’. The latest half year financials however, say the facility is ‘in planning’.

Also announcing big data centre plans for Auckland was DCI Data Centers. The Brookfield Asset Management portfolio company already had one data centre build underway in January 2022 when it announced it was adding a second to the lineup.

It held a ground breaking ceremony in August of that year for AKL02, which it said would be ‘one of New Zealand’s largest data centres’.

Combined the two DCI centres would bring $600 million to the Auckland region, with a combined economic value exceeding $1.4 billion over the life of the projects, DCI claimed.

The first of those centres, in Westgate in north-west Auckland, was completed on time and on budget in early 2023. It was first announced in 2021, and was fully leased prior to opening.

Not to be outdone, Kiwi telco Spark also recently announced plans to build a hyperscale data centre campus on Auckland’s North Shore, having reached conditional agreement to purchase land. The telco completed a 10MW expansion of its Takanini data centre last August.

Canberra Data Centres is also planning a 7,000m2 facility in Hobsonville and a second, 11,000m2 facility in Silverdale, where construction is already underway.

It’s not just Auckland in the data centre running. Datagrid New Zealand is planning a ‘carbon neutral hyperspace data centre’ in Southland, having acquired 43ha in Makarewa.

The $700 million project is headed up by Remi Galasso, who founded Hawaiki Cable, among other things and CallPlus founder Malcom Dick .

Intelia, another company founded by Galasso, announced a submarine cable project linking Invercargill with Sydney and Melbourne a month ago.

Datagrid’s offering is one of two data centres planned for Southland, with New Zealand co-location data centre company T4 also announcing plans for a $50 million data centre. The facility will be T4’s – and New Zealand’s – first tier 4 data centre.

That data centre is due to commence construction this year, though specifics on its location haven’t been revealed.

Last week T4 announced it had bought global IT infrastructure services provider and IBM spin-off Kyndryl ’s East Tamaki facility for an undisclosed sum. T4 has been using the East Tamaki data centre, which is an all-of-government approved tier 3+ site, since 2022. The company also has data centres in Whangarei and Auckland.

A UK-based startup, Lake Parime, which announced plans in 2021 for a data centre near Clyde went into liquidation last year.

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