Data centers rely on a "full power" state.

Data centers rely on a “full power” state.

The South is on the cusp of a data-driven revolution driven in large part by access to clean, reliable and renewable energy sources. Four data centers, one in central Otago and three in Southland, are in various stages of development. Who is behind them and what are they? Jared Morgan reports.

The emergence of data centers.

They can use enough electricity to power Dunedin.

The largest of them will use 150 megavolts – this is enough to supply 120 thousand households with their electricity needs. Whether you are for or against bringing them to New Zealand, or don’t really have an opinion, most agree there is plenty of juice to supply just one concentrate.

To find a power source that can provide this kind of electricity, companies, both domestic and international, are looking to the south.

The reason they search there is simple.

The South Island may have excess capacity from New Zealand aluminum smelters (NZAS).

It’s still a case: Will NZAS’s massive Tiwai Point aluminum smelter remain open after 2024 or not? NZAS is a joint venture between the world’s largest and second largest metals and mining company Rio Tinto Group and Sumitomo Corporation, a Japanese company “Sogo Shusha” (general trading company), and is scheduled to close in 2024.

In February, Rio Tinto indicated that the smelter could continue operating beyond the previously indicated closing date apart from higher aluminum prices.

That leaves its owner, state-owned Meridian Energy, looking for business elsewhere.

Meridian is not alone – other power generators are eyeing this market.

Regardless of Tiwai Point’s future, those behind the development of data centers are moving forward.

Among the four, there are two cryptocurrency mining plans.

Cryptocurrency-focused data centers are not without critics, who see volatile prices of virtual currencies and the high energy consumption of mining activities as reasons for concern.

It is simply the need for energy – in the form of electricity – which is the reason and the driver for the South being an attractive proposition for such projects.


data network

DataGrid was one of the first companies to rise to the plate, announcing plans to build a large-scale data center in North Makarewa near Invercargill in December 2020.

The construction carries an estimated price tag of $2 billion.

DataGrid was founded by Remi Galasso of Hawaiki Cable and Malcolm Dick, founder of CallPlus Ltd. Both have working pedigree.

Hawaiki Cable is a 15,000 km telecommunications cable that connects 356 million consumers in Australia, New Zealand, American Samoa, Hawaii and the continental United States while CallPlus was a telecommunications company providing telephone, calling, internet, mobile and advanced calling services to New Zealand businesses.

As DataGrid, the company has purchased a 43-hectare site in North Makariwa with a view to building up to 10 units of 6,500 sq m each (which will house the data center’s key components – IT infrastructure) and consuming approximately 150 MW – all from the Manaburi plant.

Mr Gallasso said he hoped to secure resource approval from Southland County Council to proceed with construction in the second half of this year.

T4 . group

The newly formed Kiwi Group T4 Group is also eyeing the strength of Manaburi, which has plans to set up a massive $50 million hub in Southland, the exact location of which has not been disclosed.

Founded in 2021, the company has a vision to provide regional New Zealand with “access to aggregation data centers and reliable, secure, green and economical data network solutions”.

However, the company also plans to get electricity from the Monway hydropower plant, owned by Pioneer Energy.

Using power from both terminals, the company will provide a Tier 4 data center, the first of its kind in New Zealand, that will have 100% effective uptime, in addition to existing Tier 2 and Tier 3 operations located in the North Island, which are not operating all the time.

T4 Group Director David Simpson says the Level 4 center’s design will increase the flow of cool natural air to dramatically reduce reliance on powered cooling systems, while the warm air will be extracted and used by a large local company.

Besides its use of hydro power, it will also be the first carbon-neutral data center in the country.

“T4 Group does not wash its operations. Currently, data centers in New Zealand rely heavily on coal as a secondary source of energy, which companies compensate by buying carbon credits,” said Mr. Simpson.

In another commitment to the South, T4 Group will be headquartered in Southland.


The power generated in Monowai is also central to GridShare’s plans to start powering a data center that mines bitcoin.

It begins operations this month, and is backed by a $2 million seed capital increase to launch the venture.

It could potentially use up to 30% of the power plant’s generation capacity.

Started by three Kiwi entrepreneurs, Tom Algee, Sam Keefe and Craig Lusty, the company has ambition.

Their vision is to accelerate the growth of renewable energy and become the leading green blockchain and digital currency infrastructure company in New Zealand and abroad.

Its facility is a 2-megawatt data center that can be converted into high-performance cloud-based computing of the future.

Tom Algee, CEO of GridShare, says working with Pioneer Energy is a step towards supporting the transition to 100% renewable energy in New Zealand.

As he says, the company will take the opportunity to test the technology to ramp up and down energy consumption in real time, which is good for bitcoin mining.

This will provide a powerful solution to the problem of integrating renewable energy generation with the electricity grid.

“Renewables need a customer who can buy power when the grid doesn’t need it and turn it off during peak periods.”

He thinks GridShare is that customer.

Lake Barim

In central Otago, construction has begun on a crypto-mining facility to be built under the Clyde Dam operated by Contact Energy, the UK’s digital infrastructure construction project, Lake Paremi, citing the area as an ideal base.

The 100% owned subsidiary, Simply Energy, consisting of eight containers with approximately 3,000 servers, operates the project and got it started late last month.

Its cost has not been disclosed.

Lake Parime will operate the data center under a lease agreement with Contact Energy and the facilities are expected to operate only intermittently, when the variable renewables mean there is excess power to use.

Lake Parime presents itself as using excess renewable energy by turning that energy into one of its modular “Powerbox” data centers, and using that to power high-performance computing applications such as machine learning, visualization, modeling, blockchain and cryptocurrency.

What did you just read?

Anatomy of the “technologist” is perhaps one of the biggest challenges for the uninitiated.

Cue University of Otago Associate Professor David Ayers, who can be found in the university’s Department of Computer Science.

According to Professor Ayers, a data center is just a large number of computers located in the same location.

This is energy thirsty.

The co-location offers economies of scale in terms of cooling and energy management systems, he says.

The latter includes backup power, and possibly connection to multiple independent parts of the power grid.

The last component is communications and data centers are usually located so that they have multiple independent ways to connect to the Internet.

Hyperscale is simpler than it sounds.

“Hyperscale essentially means that it is very large, although ultra-large facilities will also be more efficient than smaller data centers, and easily scalable than smaller data centers, again based on economies of scale.”

Professor Ayers says the uses for the data center are diverse.

“The computers inside the data center will be used for something. It could be storage and databases, but often these are also devices that generate the responses you receive when you make requests from your computer to the Internet.”

When it comes to cryptocurrency mining, he has reservations.

“The potential use of data centers for ‘cryptocurrency mining’ involves computers burning energy in a race to solve computational puzzles that have no value in themselves.

“Winning such a race gives the right to add a set of transaction records to blockchain Proof of Work ledgers like bitcoin.”

He says the proof-of-work was designed with no regard for its environmental impacts.

“My view is that promoting the use of proof-of-work is an environmentally irresponsible act at a time when the planet collectively has more significant uses of energy, renewable or not.”

Low-powered Proof-of-Work alternatives loom, though he doesn’t realize they’ve been successfully used in a bitcoin-wide cryptocurrency yet.

Professor Ayers’ concerns about the energy use of cryptocurrencies are not without merit or justification.

Last year, the Central Asian nation of Kazakhstan suffered a series of blackouts after its Soviet-era national network was fried – unable to keep up with demand for cryptocurrency.

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