Construction expressions of interest to be called for $1b Southland data centre
Sunday, 27 March 2022
Expressions of interest are expected to be called for in the coming days for construction of a $1 billion data centre in Southland.
Datagrid New Zealand Limited Partnership has Overseas Investment Office (OIO) approval to build the centre at a 43-hectare site at Makarewa, about 12 kilometres north of Invercargill.
The hyperscale data centre could see Southland become a cheap, green hub for storing data and providing cloud computing services in Australia, New Zealand and other countries.
Datagrid chief executive Rémi Galasso said as construction of the data center would be modular, with separate areas built during the next couple of years, and there would only be a couple of hundred workers on site at any one time.
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In the coming days expressions of interest would be issued, and he hoped to receive compelling proposals from New Zealand companies, including those based in Southland, “with which we look forward to forging valuable partnerships to create a local ecosystem of workers that will join us on our journey over the next 5-10 years,” Galasso said.
Datagrid was finalising its design and an open tender for the first tranche of construction would be launched, on a turnkey basis, he said.
“The entire construction site will definitely require hundreds of workers, and we're in discussions with a number of construction companies able to allocate resources at that scale.”
“The next step is to finalise our data centre design, and to then seek the appropriate consents. Our key objective is to start construction by early 2023.”
Key deadlines for the project are outlined in an OIO assessment report, released under the Official Information Act.
Datagrid must lodge resource consent applications by June 30, 2023. If all relevant consents are not obtained by January 31, 2024, the OIO may require Datagrid to dispose of the land.
Construction must start by June 30, 2024 and be finished two-and-a-half years after that, being complete and operational by New Year's Day, 2027.
The consent would be for a facility of up to 10 modules, each of 6500 square metres, which if all built would cover an area of about nine rugby pitches. The purchase price of the land is redacted from the OIO report.
Record housing construction, demand for real estate and the Covid-19 pandemic is putting increasing pressure on supplies and prices of timber, steel, board products, roofing materials and other construction components.
Datagrid was not expecting building material shortages at this stage, Galasso said.
However, prices for concrete and steel were definitely going up, and Datagrid had to factor these additional costs into the business case, he said.
More broadly, inflation was a significant and growing concern for the entire telecommunications industry, and was something “we simply have to deal with if we’re to satisfy the very real, and rising, demand for sustainable data storage”, Galasso said.
Based on a design estimate by global infrastructure firm and specialists in digital infrastructure AECOM, the planning and construction is likely to take place over the course of two years, and is likely to introduce over $1b of additional investment into New Zealand, it says in the OIO report.
The construction stage would also likely create over 100 full-time equivalent (FTE) jobs and approximately 45 FTE positions to operate the Datagrid.
The resource consent application would allow the data centre to consume up to 150 megawatts of power, which is more than a quarter of the power currently used by the Tiwai Point aluminium smelter.