Software outsourcing company Datagrid and energy provider Meridian have announced that New Zealand is set to get its ‘first hyperscale data center’ located in Invercargill, the southernmost city in the country.

The $700 million data center project will span 25,000 square meters and have a capacity of 60 MW. In several years, it is anticipated to grow to 40,000 square meters with a capacity of 100 MW.

New Zealand is in the right place at the right time

Situated in the island of Southland, Invercargill’s cool climate, ample land, and availability of renewable energy sources makes the region an ideal location for a data center.

Rémi Galasso, founder and chairman of Datagrid, revealed that as of now, the only hyperscale data center servicing New Zealand is located in Australia. However, Southland’s climate is believed to make powering a data center in the region 15% more cost effective compared to Australia.

“These savings, along with New Zealand’s well-educated workforce and long term political stability make Southland highly attractive as a location for global companies to safely store their data,” added Mr. Galasso.

Thanks to its climate and abundance of clean energy sources, the country as a whole offers strong potential for a booming data center economy. The data center project is forecast to demonstrate how New Zealand’s strong advantage in renewable energy can deliver economic benefits over the coming years.

“A low-emissions data center is a huge opportunity for Southland and all of New Zealand to leverage our abundant clean energy to create high-value jobs and diversify our economy even more into the digital space,” said Guy Waipara, Meridian Energy’s General Manager Generation and Natural Resources.

The data center is expected to complement the power available from the Manapōuri station.

Malcolm Dick, also one of the heads of Datagrid, said that the lack of international connectivity in New Zealand has been a limiting factor for developing the data center industry in the country. But with the arrival of the Hawaiki Cable in 2018, the circumstances are expected to change rapidly.

A significant part of the $700 million project involves laying a new submarine cable to connect Invercargill directly to the east coast of Australia, as well as laying a domestic festoon cable to connect Invercargill with cities on New Zealand’s east coast.

The latency between Invercargill and Australia is believed to be approximately 24 milliseconds, which is within the upper limit of 35 milliseconds accepted as standard by the data center industry. New Zealand’s remote location is expected to provide a competitive advantage, as many companies are looking to locate their data away from larger centers which are at greater risk of disruptive events.

When completed, the data center could provide connectivity to over 20 million people across New Zealand and Australia’s states of New South Wales, Victoria, and Queensland.