Last week AWS announced their plans to invest USD 5.3 billion to launch new data centres in New Zealand’s Auckland region by 2024. Apart from New Zealand, AWS has recently added new regions in Beijing, Hong Kong, Mumbai, Ningxia, Seoul, Singapore, Sydney and Tokyo; and are set to expand into Indonesia, Israel, UAE and Spain.
In a bid to deliver secure and low latency data centre capabilities, the infrastructure hub will comprise three Availability Zones (AZ) and will be owned and operated by the local AWS entity in New Zealand. The new region will enable local businesses and government entities to run workloads and store data using their local data residency preferences.
It is estimated that the new cloud region will create nearly 1,000 jobs over the next 15 years. They will continue to train and upskill the local developers, students and next-gen leaders through the AWS re/Start, AWS Academy, and AWS Educate programs. To support the launch and build new businesses, the AWS Activate program will provide web-based trainings, cloud computing credits, and business mentorship.
New Zealand is becoming attractive to cloud and data centre providers. Last year, Microsoft had also announced their Azure data centre investments and skill development programs in New Zealand. To support the future of cloud services and to fulfil the progressive data centre demands, Datagrid and Meridian Energy partnered to build the country’s first hyperscale data centre, last year. Similarly, CDC Data Centres have plans to develop two new hyperscale data centres in Auckland.
An Opportunity for New Zealand to Punch Above its Weight as the New Data Economy Hub
“The flurry of data centre related activity in New Zealand is not just a reflection of the local opportunity given that the overall IT Market size of a sub-5 million population will always be modest, even if disproportionate. Trust, governance, transparency are hallmarks of the data centre business. Consider this – New Zealand ranks #1 on Ease of Doing Business rankings globally and #1 on the Corruptions Perception Index – not as a one-off but consistently over the years.
Layered on this is a highly innovative business environment, a cluster of high-quality data science skills and an immense appetite to overcome the tyranny of distance through a strong digital economy. New Zealand has the opportunity to become a Data Economy hub as geographic proximity will become less relevant in the new digital economy paradigm.
New Zealand is strategically located between Latin America and Asia, so could act as a data hub for both regions, leveraging undersea cables. The recently initiated and signed Digital Economy Partnership Agreement between Singapore and New Zealand – with Chile as the 3rd country – is a testimony to New Zealand’s ambitions to be at the core of a digital and data economy. The DEPA is a template other countries are likely to sign up to and should enhance New Zealand’s ability to be a trusted custodian of data.
Given the country’s excellent data governance practices, access to clean energy, conducive climate for data centres, plenty of land and an exceptional innovation mindset, this is an opportunity for global businesses to leverage New Zealand as a Data Economy hub.“
New Zealand’s Data Centre Market is Becoming Attractive
“The hyperscale cloud organisations investing in New Zealand-based data centres is both a great opportunity and a significant challenge for both local data centre providers and the local digital industry. With AWS and Microsoft making significant investments in the Auckland region the new facilities, will improve access to the extensive facilities provided by Azure and AWS with reduced latency.
To date, there have not been significant barriers for most non-government organisations to access any of the hyperscalers, with latency of trans-Tasman already reasonably low. However, large organisations, particularly government departments, concerned about data sovereignty are going to welcome this announcement.
With fibre to the premise available in significant parts of New Zealand, with cost-effective 1GB+ symmetrical services available, and hyperscalers on-shore, the pressure to grow New Zealand’s constrained skilled workforce can only increase. Skills development has to be a top priority for the country to take advantage of this infrastructure. While immigration can address part of the challenge, increasing the number of skilled citizens is really needed. It is good to see the commitment that AWS is making with the availability of training options. Now we need to encourage people to take advantage of these options!“
Top Cloud Providers Continue to Drive Data Centre Investment
“Capital investments in data centres have soared in recent quarters. For the webscale sector, spending on data centres and related network technology account for over 40% of total CapEx. The webscale sector’s big cloud providers have accounted for much of the recent CapEx surge. AWS, Google, and Microsoft have been building larger facilities, expanding existing campuses and clusters, and broadening their cloud region footprint into smaller markets. These three account for just under 60% of global webscale tech CapEx over the last four quarters. The facilities these webscale players are building can be immense.
The largest webscalers – Google, AWS, Facebook and Microsoft – clearly prefer to design and operate their own facilities. Each of them spends heavily on both external procurement and internal design for the technology that goes into their data centres. Custom silicon and the highest speed, most advanced optical interconnect solutions are key. As utility costs are a huge element of running a data centre, webscalers also seek out the lowest cost (and, increasingly, greenest) power solutions, often investing in new power sources directly. Webscalers aim to deploy facilities which are on the bleeding edge of technology.
An important part of the growth in cloud adoption is the construction of infrastructure closer to the end-user. AWS’s investment in New Zealand will benefit their positioning and should help deliver more responsive and resilient services to New Zealand’s enterprise market.“
New Zealand’s cloud landscape is looking to change drastically with the arrival of its first hyperscale data centre platform in Invercargill, a city in the southern tip of New Zealand’s South Island. The focus on digitalisation (in both the private and public sectors), growing data localisation mandates, the need for big data storage, and the demand for scalable apps and innovations are driving the demand for hyperscale data centres and more undersea cables in the region.
In December 2020, Meridian Energy, New Zealand’s fourth-largest electricity retailer, and Datagrid New Zealand, run by Hawaiki Cable announced the launch of the project to develop a 60MW, 25,000 sqm facility near the town of Makarewa at a cost of nearly USD 500 million. The project is due for a commercial launch in 2023, and a major part of the investment will involve the laying of two new submarine cables. The first subsea cable will connect Invercargill to Sydney and Melbourne in Australia and the second will connect with Hawaiki Cable’s landing point at Mangawhai Heads, north of Auckland which will further extend to Auckland, Wellington, and Christchurch.
The country clearly recognises the need for a robust infrastructure to accelerate innovation – Microsoft has also received approval from the New Zealand government in September last year to open a data centre region. To support the future of cloud services and to fulfil New Zealand progressive data centre demands, CDC Data Centres have also planned to develop two new hyperscale data centres in Auckland, New Zealand.
Ecosystm Comments
“The introduction of the Datagrid New Zealand data centre in Invercargill will be a welcome asset to the Southland region of New Zealand. With primary industries being farming, fishing and forestry, the region has done well throughout the COVID-19 pandemic. This initiative will further benefit the local economy by delivering opportunities for economic prosperity for local businesses.
With long-term growth at the data centre expected to consume up to 100MW of renewable energy, Meridian Energy is well equipped to provide renewable energy generated at the Manapouri hydroelectric power station, capable of generating 850MW. The potential closure of the 550MW Tiwai Point Aluminium Smelter is expected to put the country in a position of oversupply.
The data centre will be a critical piece of New Zealand’s infrastructure, supporting the roll-out of 5G networks by telecom providers and the need for low-latency cloud compute and data storage. Datagrid will provide a competitive alternative to the likes of Microsoft’s new data centre.
While the construction and opening of the data centre will possibly add more stress to New Zealand’s under-resourced construction sector, it will also create tech jobs in the Southland region, in the long term. Unique to the region is the Southern Institute of Technology that has a Zero Fees Scheme that has been confirmed until the end of 2022. The data centre will help to keep skilled tech workers in the region.“
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