In recent years, New Zealand has caught the eye of several big data centre players. From Microsoft and Amazon to Australian firms CDC and DCI, there’s no shortage of interest in the Land of the Long White Cloud. As in other jurisdictions, demand is being driven by a boom in cloud computing, a pandemic-fuelled surge in internet traffic, remote working and requirements for data sovereignty.
New Zealand has previously relied on offshore data centres, but things are quickly changing. All up, the country looks set to benefit from an estimated $10 billion of investment and hundreds of megawatts of new or upgraded data centre capacity. With studies showing data centres can boost economies that’s great news for the nation’s bottom line.
Cold hard economics
There’s no doubt the data centre operators heading our way have chosen wisely. That’s down to a unique confluence of factors, including energy savings that can be gained from siting in cooler climates.
Geography is a big part of the reason New Zealand is so ideal for data centres. The North and South Islands are positioned in the mid-latitudes; our climate is moderated by surrounding ocean, and we’re exposed to prevailing Westerly winds. The upshot - we enjoy a temperate climate, year-round.
Data centres produce a serious amount of heat. Much of the energy they use is devoted to cooling rows of whirring servers. Making sure the equipment in these vast digital warehouses doesn’t overheat is what keeps data centre operators awake at night!
In milder, less humid environments like New Zealand’s, data centres can take advantage of cooler outside air to help run their cooling systems. It’s a win-win for energy use and cost savings, which can be seen in power usage efficiency (PUE) - a ratio that describes how efficiently a data centre uses energy.
More data is being processed than ever before, and demand for data centre services is quickly rising. Globally, data centres are responsible for around 1 percent (250 TWh) of the world’s electricity consumption. That may seem like a small number but take it from an electrical engineer – it's not insignificant.
Data centre operators are keenly interested in keeping their environmental impact in check. Many are looking to green investments and are likely to see New Zealand as a premium investment choice. Access to renewable electricity supply is a high priority - especially for larger, more energy intensive ‘hyperscale’ facilities.
With 82 percent of electricity coming from renewable sources, New Zealand is a sure bet. Our gigantic southern hydro schemes generate well over half the country’s renewable supply. It’s no surprise that data centre operators are eyeing the hydro-rich south – even more so given the on-again, off-again future of the hydro-powered Tiwai Point aluminium smelter.
A local company called Datagrid has already bought a large plot of land near Invercargill and is planning a 150MW hyperscale facility. Other data centre firms are also exploring the possibility of building in Southland.
For a data centre to operate reliably and effectively, global ICT connectivity is everything. Look at a map of the world’s undersea cables and it immediately becomes clear how well-connected we are. The 30,500-kilometre-long Southern Cross Cable directly links New Zealand with Australia, Hawaii and mainland USA. The TGA cable runs in a straight line from Raglan to Sydney.
Submarine cables like these transmit data around the planet at blistering speeds. Siting data centres near where they crawl ashore from the murky depths is important in supporting what is an increasingly data-driven world.
We're about to benefit from even more pathways. The ribbon has just been cut on Southern Cross NEXT - a new addition to the Southern Cross cable. NEXT doubles New Zealand’s internet connectivity to the rest of the world. A new submarine cable – Hawaiki Nui – connecting us with Australia, Indonesia, Singapore and USA is expected to be ready for service in 2025. Hawaiki will be the first undersea internet cable to land directly in the South Island.
With Government-led initiatives like rural broadband and a fibre-to-the home initiative set to cover 87 percent of the population by the end of 2022, New Zealand punches well above its weight with domestic internet connectivity too – meaning our in-country demand for data storage is likely to continue growing exponentially.
Peace, politics and people
Pick an international political metric and it’s likely you’ll find New Zealand at (or very near) the top of the list. We rank as the world’s least corrupt nation and are the second most peaceful. We score 98 out of 100 in the Freedom of the World Index 2022 and come second in the EIU Democracy Index 2021. The Index of Economic Freedom 2022 places us fifth.
Dedicating time and resources to a data centre investment is no small matter. Operators need confidence their commitment will be secure. Compared with many other countries, New Zealand’s high economic and political stability is a major drawcard. Our government values the role international investors play in helping develop the economy and actively encourages businesses to get involved here.
Oh, did I mention the education system? New Zealand’s eight government-funded universities and other higher education providers train IT pros with skills that include cloud management, data analytics, network programming and security. Joining the dots, New Zealand stands out in a turbulent world as a reassuringly safe and secure place to do business.
Strength and seismicity
Straddling a plate boundary, the proverbial elephant in the data centre room is New Zealand’s earthquake risk. But it’s not as formidable a creature as you might think. The Building Act divides the country into three seismic risk areas – high, medium and low - and our Building Code sets seismic performance standards that all building work must meet.
In our shaky, natural hazard-prone isles, New Zealand scientists and engineers have garnered an impressive international reputation - especially when it comes to seismic resilience and building for extreme weather events.
You don't have to look far to see some excellent examples. Grey Base Hospital and Wellington's Kennedy Building are two standouts. Couple seismic engineering with first-class planning, architectural, digital engineering, property and asset management capabilities, and data centre operators thinking of setting up here are onto a winner.
As critical pieces of communications infrastructure, data centres are built to more exacting standards than regular buildings. It's comforting to know that New Zealand’s planners and engineers, including from WSP, are at the forefront of resilient, low damage infrastructure design, and are adept at managing building regulations and stakeholders at the national and regional level.
Add it all up and it’s not hard to see why New Zealand is such an attractive proposition for data centre operators. There’s lots of data centre capacity coming our way and no question we’re open for business for more. Come on down!