Meridian Gets In Behind $700m Plan For 'Hyperscale' Data Centre

Meridian Energy Has Agreed To Supply Datagrid With 100 Megawatts Of Power From The 800MW Manapouri Hydro Scheme

Meridian Gets In Behind $700m Plan For 'Hyperscale' Data Centre
By Tom Pullar-Strecker

An audacious plan has been unveiled to build a huge cloud computer data centre in North Makarewa in Southland, connected by two new subsea cables, at a total cost of about US$500m ($700m). The United States “FAAMG” tech giants – Google, Amazon, Apple, Facebook and Microsoft – would be able to use the facility to serve about 20 million customers across eastern Australia and New Zealand. The Datagrid project is the brainchild of Hawaiki Cable founder Remi Galasso and CallPlus co-founder Malcolm Dick who aim to have it operating in 2023.

They hope to repeat the success of the Icelandic data centre industry, which has taken advantage of its cool climate and cheap renewable power to become a hub for cloud computing, serving Europe. Meridian Energy has agreed to supply Datagrid with 100 megawatts of power from the 800MW Manapouri hydro scheme. Meridian generation manager Guy Waipara said the power company had been meeting fortnightly with Datagrid over the past few months. “Every time we catch up, we get more and more confident this project is looking positive,” he said. “Remi has got a very strong track record and is going about this business with a lot of intent.”

Meridian could provide 100MW to Datagrid while still meeting its supply commitments to the Tiwai Point aluminium smelter, he said. “If this project goes ahead just before the smelter closes that is no problem – we can accommodate it either way.” Southland District mayor Gary Tong said the public unveiling of the scheme was a good day for Southland and he was very optimistic the project was achievable. It was “quite amazing” what could be done in a short time, he said.

Digital Economy Minister David Clark said the Government in general welcomed proposals to increase the onshore provision of data centres and “looked forward to seeing how this proposal progresses”. Energy Minister Megan Woods said there were “a range of exciting possibilities for Southland and the use of its formidable renewable energy resource.” “We’re interested in seeing what ideas come forward as part of the region’s transition plan, especially with Rio Tinto looking to eventually exit its operations at Tiwai,” she said.

Galasso spearheaded the $445m project to build the Hawaiki internet cable which has linked New Zealand, Australia and the United States since 2018. With a footprint of 40,000 square metres, Datagrid would be the country’s first “hyperscale” data centre, he said, several times larger than existing facilities such as Datacom’s Orbit data centre in Auckland. Southland has previously been mooted as a good place to locate data centres because of the economic advantage provided by its cool climate and renewable power.

Power is one of the biggest expenses in cloud computing, but Galasso said Datagrid’s deal with Meridian meant it would be able to buy electricity at about a third of the price in Australia. Even in Auckland, about 30 per cent of power consumed by data centres had to go towards cooling the computers they house. But Southland’s “amazing weather”, with an average annual temperature of 9.8 degrees, meant Datagrid’s cooling overhead would be half that, he said.

“We will save 15 per cent of the power, which means we will save 15 per cent of the cost.” Dick said a couple of businesses had looked into building data centres in Southland in the past before discounting that because of a lack of international connectivity. Datagrid intends to solve that by laying a 2900 kilometre subsea cable between Invercargill, Sydney and Melbourne, and another to Hawaiki Cable’s landing point at Mangawhai Heads, north of Auckland. The second cable would also have connections to Auckland, Wellington and Christchurch and potentially other east coast cities, along the way.

Those two cables would cost US$100m while the data centre itself would cost about US$400m, Galasso said. Branches could also run to the Chatham Islands, both to connect the community and the Rocket Labs’ satellite-tracking station, and to Stewart Island and the US and New Zealand bases in Antarctica. The entire venture depends on at least one of the big US cloud computing giants agreeing to become an anchor tenant, so wasn’t “100 per cent guaranteed”, Galasso said. Talks were taking place and “hopefully within the next 12 months we will sign an anchor tenant and then confirm the project,” he said.

The FAAMG companies had a strategy of spacing out their cloud computing facilities so as to keep the ‘lag’ experienced by their customers under 35 milliseconds, he said. “This radius lets us cover the whole of Victoria, almost the whole of New South Wales, and a bit of Queensland. “We estimate the total population within this circle, including New Zealand, at 20 million.” Galasso said the data centre would only need 25 staff to operate.

But many more people would be needed during construction and Datagrid could potentially act a catalyst for a “kind of New Zealand Silicon Valley” encouraging IT businesses and start-ups to the region, he said. “I am committed to using, as much as I can, local companies for the building.” The data centre could be built in tranches of 10,000 square metres. Datagrid has appointed US data centre design company Aecom as its technical consultant.

North Makarewa was selected because it has an existing Transpower substation connected by three power lines, and two Chorus fibre cables passing through it which – with the new subsea cables – would give it a total of four fibre links. Datagrid’s plan is for the subsea cables to come ashore somewhere along the 26km Oreti Beach, just outside Invercargill. “We are talking to fishermen because we need to ask for a two nautical mile-wide zone where they could not anchor or do any trawling, to protect the cable,” Galasso said.

Datagrid’s preference was to raise funding through equity and debt from infrastructure investors in New Zealand, once an anchor tenant was signed, he said. “Obviously if we can’t raise 100 per cent in New Zealand, then we will go to Australia and the US.” Dick said he and Galasso were funding the cost of the preparatory work, which was likely to run into the millions.

“The whole project needs quite significant funding from the various parties that will be involved. There is huge interest in the project but it is early days.” Dick said he had chosen to be involved partly because his family on his father’s side came from Invercargill, having originally arrived to help build Larnach Castle, and the area was close to his heart. “We know there is a lot of political goodwill towards doing something down there.”

This news was originally published at Stuff