Plan for super-giant Southland data centre a step closer

An artist's impression of the data centre proposed for Makarewa, about 7km north of Invercargill. Image / Supplied

A plan for a super-massive data centre in the South Island is a step closer following news that Auckland-based Hawaiki plans a new trans-Pacific cable that will provide the South Island with its first direct broadband link to the world.

Construction on the new Hawaiki Nui cable will begin in early 2022.

Once completed - the goal is 2025 - the new cable will link Invercargill, Dunedin and Christchurch with Los Angeles, Singapore and Jakarta, with connections also running to Sydney, Melbourne, Brisbane, Darwin, Batam in Indonesia and Hawaii.

"I can't share a budget at this stage as we are in the process of selecting our supplier. We expect to finalise negotiations and sign a supplier contract in March 2022," Hawaiki CEO Remi Galasso told the Herald.

"The South Island, and especially Christchurch and Dunedin, does require a direct international link to Australia, Singapore and the US," Galasso said.

The new cable is also a vital piece of the puzzle for the a second company, DataGrid - cofounded by Galasso and telecommunications richlister and Hawaiki cofounder Malcolm Dick, which plans a "hyperscale" data centre in Southland.

The Hawaiki Nui cable (in green) would complement the existing trans-Pacific Hawaiki cable that went live in 2019 (in white). Image / Supplied

According to a summary of the project by partner Meridian, Datagrid is "planning the construction of a 60 megawatt, 25,000 square metre facility near the town of Makarewa".

"It is anticipated to scale to a 100 megawatt, 40,000 sqm facility within several years, covering an area of more than five rugby fields and consuming as much power as a town of 80,000 people."

That means if the Datagrid facility goes ahead, it will be much larger than the series of "hyper-scale" data centres currently being built in northwest Auckland by various contenders. DCI Data Centres, for example, is constructing a 10 megawatt facility (big data centres are described in megawatts - or the amount of electricity they require at peak operation). And the $300 million-plus that half Infratil-owned CDC is spending on two data centres will see a 7000 sqm facility in Hobsonville and an 11,000 sqm server farm in Silverdale.

Amazon and Microsoft have yet to release any tech specs for their respective data centre builds in northwest Auckland - although Amazon says the total budget for its server farms in the city will run to $7.5 billion over 15 years.

Dick has framed Datagrid as a natural project to take up the slack from Meridian's Manapouri Power Station after Rio Tinto finally closes its aluminium smelter at Tiwai.

With its relatively cold climate, Southland is an attractive location in that data centres' biggest cost is the power bill for cooling their thousands of servers.

The most obvious drawback is the lack of any international submarine cable in the region. Dick and Galasso have always pitched Hawaiki Nui and DataGrid as paired projects, with the new cable enabling the server farm.

And although there was no more detail on funding overnight, the pair have previously put the cost of the combined initiative at $700m - with the data centre costing $530m and the balance going toward funding for the new cable.

"Datagrid plans are moving ahead as planned. We are currently finalising site acquisition due diligence and we should make some important announcements soon," Galasso told the Herald last night.

He did not offer any more detail on the site, but Dick has previous said Datagrid has taken options to buy land in Makarewa, a small town about 7km north of Invercargill, but other details are still sketchy. A Companies Office filing lists Datagrid as owned by Singapore-based H2 Cable.

Although the project is ambitious, Dick and Galasso have hit stretch targets before. Hawaiki - with Galasso as CEO and investment from backers including Dick and fellow richlister the late Sir Eion Edgar - raised $500m for a new Australia-NZ-US cable that went live in 2019.

In July this year, Singapore company BW Group announced plans to buy Hawaiki for an undisclosed price somewhere north of the Overseas Investment Office's $100m threshold.

This morning, a spokesperson for the OIO said the BW buyout was still being assessed. A decision might not be reached until 2022.

The 50 per cent Spark-owned Southern Cross Cable had a monopoly on NZ's broadband connection to the outside world for nearly two decades after it went live in 2000.

But the cloud computing and streaming boom has seen the number of cables landing in NZ proliferate over the past few years with Hawaiki's trans-Pacific effort, the Spark-Vodafone-Telstra Tasman Global Access joint venture laying a new cable between Sydney and Auckland, and the recent landing of the new Southern Cross Next cable (which is being funded, in part, through the suspension of Southern Cross's dividend payouts to its owners, and Spark's stake being watered down to 35 per cent as Telstra buys in).

The US$300m Southern Cross Next trans-Pacific cable, which will go live in April next year, will have a capacity of 72 terabits per second - or three times that off all of today's NZ-connected cables combined.

Hawaiki says its planned Nui cable will leapfrog that with total capacity of 240 Tbps.