The South is on the cusp of a data-driven revolution, largely driven 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? reports Jared Morgan.

The rise of data centers.

They can use enough electricity to power Dunedin.

The largest of these will use 150 MV, which is enough to power 120,000 homes. Whether you’re for or against their introduction in New Zealand, or don’t really have an opinion, most would agree that’s a lot of juice to supply a single center.

To find an energy source capable of supplying this type of electricity, companies, both national and international, are turning to the South.

The reason they are looking there is simple.

The South Island may have a surplus of electricity thanks to New Zealand Aluminum Smelters (NZAS).

It remains a case of: will NZAS’ massive Tiwai Point aluminum smelter remain open beyond 2024? NZAS is the joint venture between majority shareholder and the world’s second-largest mining and metallurgical company Rio Tinto Group and the Sumitomo Corporation Group, a Japanese “sogo shosha” (general trading company), and is expected to close in 2024.

In February, Rio Tinto indicated that the smelter could continue to operate beyond its previously reported closing date due to soaring aluminum prices. The smelter is powered exclusively by the Manapouri Hydroelectric Station, New Zealand’s largest hydroelectric station.

That leaves its owner, state power producer Meridian Energy, potentially looking for business elsewhere.

Meridian is not alone – other power producers are looking to this market.

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

Of the four centers, two plan to mine cryptocurrencies.

These cryptocurrency-focused data centers are not without critics, who see virtual currency price volatility and high power consumption for mining activities as areas of concern.

It is simply this need for energy – in the form of electricity – that is both the reason and the driver for the South to be an attractive proposition for such ventures.

The players

Data grid

One of the first to respond was DataGrid, which announced 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 is founded by Remi Galasso of Hawaiki Cable and Malcolm Dick, the founder of CallPlus Ltd. Both have a business pedigree.

Hawaiki Cable is a 15,000 km telecommunications cable connecting 356 million consumers in Australia, New Zealand, American Samoa, Hawaii and the Americas, while CallPlus was a telecommunications company providing telephone services, call, internet, mobile and advanced connectivity to New Zealand businesses.

As DataGrid, the company has purchased a 43 ha site in North Makarewa to build up to 10 modules of 6500 m² each (which will house the main components of a data center – the IT infrastructure) and will consume about 150 MW – all from Manapouri station.

Mr Galasso said he hoped to get consent from Southland District Council resources to go ahead with construction in the second half of this year.

Group T4

New Kiwi company T4 Group, which plans to build a large-scale $50 million center in Southland, the exact location of which has yet to be revealed, is also on the lookout for Manapouri’s power.

Established in 2021, the company’s vision is to provide the New Zealand region with “access to reliable, secure, green and economically viable colocation data centers and data network solutions”.

However, the company also plans to take power from the Monowai Hydroelectric Power Station, owned by Pioneer Energy.

Using power from both stations, the company will provide a Tier 4 quality data center, the first in New Zealand, that will have 100% efficient uptime, in addition to its current Tier 2 operations and level 3 based in the North Island, which do not work all the time.

T4 Group Director David Simpson said the design of the Tier 4 center will maximize the flow of cool natural air to significantly reduce reliance on motorized cooling systems, while hot air will be extracted and used by a large local business.

Combined with its use of hydropower, it will also be the country’s first carbon-neutral data center.

“T4 Group does not greenwash its operations. Currently, data centers in New Zealand rely heavily on coal as a secondary energy source, which companies offset by purchasing carbon credits,” said Ms. .Simpsons.

In another commitment to the South, the headquarters of the T4 Group will be located in Southland.

GridShare

The energy generated at Monowai is also at the heart of energy start-up GridShare’s plans for a data center performing bitcoin mining.

Beginning its operations this month, it is supported by an initial fundraising of 2 million dollars to launch the project.

It will potentially use up to 30% of the generating capacity of the plant.

Launched by three Kiwi entrepreneurs, Tom Algie, Sam Kivi and Craig Lusty, the company has ambition.

Their vision is to accelerate the growth of renewable energy and become the premier green blockchain infrastructure and digital currency company for New Zealand and internationally.

Its facility is a 2 MW data center that can be transformed into high-performance cloud-based computing in the future.

Working with Pioneer Energy is a step towards supporting the transition to 100% renewable energy in New Zealand, said Tom Algie, chief executive of GridShare.

As he says, the company will take the opportunity to test the technology to increase and decrease power consumption in real time, which is what bitcoin mining is suited for.

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

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

He thinks GridShare is that client.

Parime Lake

In central Otago, construction has begun on a crypto-mining facility in the shadow of the Clyde Dam, operated by UK-based digital infrastructure start-up Contact Energy, Lake Parime, citing the region as an ideal base.

Comprised of eight containers housing nearly 3,000 servers, Contact’s wholly-owned subsidiary Simply Energy is managing the project and work began late last month.

Its cost has not been disclosed.

Lake Parime will operate the data center under a lease agreement with Contact Energy and it is expected that the facilities will only operate intermittently, when variable renewable energy sources mean there is excess electricity. energy to use.

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

What did you just read?

Dissecting tech talk is perhaps one of the biggest challenges for the uninitiated.

Cue University of Otago associate professor David Eyers, who is in the university’s computer science department.

According to Professor Eyers, a data center is just a large number of collocated computers.

It’s energy intensive.

Collocation offers economies of scale in terms of cooling systems and power management, he says.

The latter includes a backup power supply and possibly a connection to several independent parts of the electrical network.

A final ingredient is communications and data centers will typically be located to have multiple independent paths of internet connectivity.

“Hyper-scale” is easier than it looks.

“Hyper-scale essentially just means extremely large, although generally large-scale installations will also be more efficient than smaller data centers, and easily scalable than smaller data centers, again based on cost savings. ladder.”

The uses of a data center are varied, says Professor Eyers.

“Computers in the data center are going to be used for something. It could be storage and databases, but often those computers also create the responses that 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 to ‘mine cryptocurrency’ involves computers consuming power in a race to solve computational puzzles that themselves have no intrinsic value.

“Winning such a race grants the right to add a block of transaction records to the proof-of-work blockchain ledgers, similar to bitcoin.”

He says proof of work was designed without paying attention to its effects on the environment.

“I think promoting the use of proof of work is environmentally irresponsible at a time when the planet collectively has greater uses for energy, renewable or otherwise.”

Low-power alternatives to proof-of-work are on the horizon, though it’s not yet known that they’ve been used successfully in a bitcoin-scale cryptocurrency.

Professor Eyers’ concerns about the energy use of cryptocurrency are not without merit or justification.

Last year, the Central Asian nation of Kazakhstan suffered a series of power outages after its post-Soviet-era national grid burned out – unable to keep up with cryptocurrency demand.