In contrast to many telcos globally, New Zealand operator Spark has made accelerating its data centre business a core strategy and is now well positioned to capture its share of this market’s growth. W.Media sat down with Spark Data Centres customer and growth lead Matt Ryan to discuss the operator’s ambitions in the space.
W.Media: Auckland has a total IT capacity of around 175MW according to DCByte. How does Spark plan to differentiate itself in such a competitive landscape?
Ryan: Spark has evolved from a traditional telecommunications business, to become a leading technology company in the New Zealand market. We’re uniquely positioned to service the end-to-end digital infrastructure and technology requirements for New Zealand’s digital economy with our nationwide data centre network, complementary digital infrastructure, such as our fibre networks and subsea cable assets, our relationships with cloud hyperscalers and our ability to provide products and services direct to customers. Spark’s national portfolio of data centres are carrier and cloud neutral and house an ecosystem of national and international public and private cloud, content and connectivity service providers. Spark also provides national network connectivity and is a major consortium member of the Southern Cross and Tasman Global Access submarine cables connecting New Zealand to the world. Our Auckland data centres also house the main points of presence (PoPs) for these and other international cable systems, plus all major national and international customer networks. Our analysis shows the New Zealand data centre market is predicted to grow from ~90MW today to ~500MW by 2030, driven by the acceleration of AI and ongoing business migration to the cloud. With Spark’s current 22MW of data centre capacity, our potential development pipeline now sitting at 118MW, and three strategic Auckland locations primed for investment, we are well positioned to capture a significant share of this growth.
W.Media: What are the key challenges and opportunities for establishing data centres in Auckland versus the South Island, particularly regarding land and power availability?
Ryan: As is the case in most major international markets currently, there are significant challenges in identifying and establishing new sites for the development of large-scale data centres in Auckland. However, with the right local market knowledge, expertise and established industry relationships we have been able to progress opportunities that meet the strict location, connectivity, feasibility and sustainability criteria required by Spark Data Centres and its customers. Spark now has three large-scale data centre campuses it is planning to develop in Auckland, with land, power and resource consents being secured for a total pipeline of ~118MW of new capacity. We also own and operate a number of regional and edge data centres around the country, including in the Waikato, Bay of Plenty, Wellington, and in both Christchurch and Dunedin in the South Island. We are enhancing our presence in some of these locations, and will generally look to invest in new capacity based on customer demand. We believe New Zealand is strongly positioned to grow data centre capacity at scale, with land and renewable power more accessible than other Asia Pacific markets. However, Auckland is the core market where Spark’s large-scale growth is focussed over the medium term due to the high demand for capacity there. This is demonstrated by all three global public cloud providers launching cloud regions in Auckland. The city’s position as the preferred location for major national and international customers in the data centre and technology sectors is well-established. The Auckland region boasts superior international connectivity, which is crucial for data centres and tech companies. The city serves as a critical landing point for major submarine cable systems including Southern Cross, Hawaiki and Tasman Global Access (TGA). These cable systems have established their main Points of Presence in Auckland, ensuring direct and low-latency connections to global networks. Auckland’s developed fibre optic network complements the international connections, providing robust local and national connectivity.
W.Media: The hyperscalers have paused their data centre developments due to reported planning issues. Are you having similar issues and is there anything the New Zealand government can do to improve data centre regulation?
Ryan: We are not privy to information about the hyperscalers’ specific developments in New Zealand, so cannot comment on this. However, Spark is an experienced owner, developer and operator of data centres in the New Zealand market and has successfully delivered significant new projects on time and on budget in the current environment. We recently completed expansion of our flagship Auckland data centre campus in Takanini with a new 10MW facility, on time and on budget. We have also this year successfully achieved resource consent approval for our planned new North Shore data centre campus. This project is part of a 43-hectare masterplan development and represents a world-first in sustainable development. This consent was secured through the New Zealand Governments COVID-19 Recovery (Fast-track Consenting) Act 2020, which allows expedited approval of significant national projects that will contribute to New Zealand’s economic recovery. New Zealand’s robust environmental regulatory framework and clean, green image is a cornerstone of our national identity and global reputation. However, to capitalise on our potential as a green data centre and AI hub in the Asia-Pacific region, we need to ensure that New Zealand remains a cost-effective location for data centre development. We would like to see continued streamlining of regulatory processes to support the efficient development of data centres and renewable energy projects without compromising our equitable environmental standards.
W.Media: The South Island has abundant renewable energy. Is Spark interested in leveraging the
region’s green energy potential in its sustainability strategy?
Ryan: New Zealand has abundant renewable energy, not just the South Island, and all electricity generation in New Zealand feeds into the same National Grid. A reliable and sustainable supply of energy is essential to power Spark’s infrastructure and to enable future growth. The New Zealand energy system is facing a number of challenges from the impacts of climate change, the increased pressure put on generation through electrification of industrial processes and the longer-term transition to 100% renewable electricity generation. Part of Spark’s sustainability strategy is to decouple our business growth from emissions growth by working in partnership with our energy partner to utilise our electricity procurement to support the development of renewable energy generation in New Zealand. This creates additional generation capacity to meet growing demand and supports New Zealand’s overarching climate goals. Through our existing energy supply agreement, dating back to 2021, Spark has been working with our energy partner, Genesis Energy, on opportunities to work together to achieve Spark’s SBTi target. In May 2024 this culminated in the announcement of a new renewable energy partnership with Genesis. Under a ten-year Power Purchase Agreement (PPA), we will purchase all of the electricity generated by Genesis’ first solar farm in Lauriston, Canterbury.
W.Media: Greenwashing is becoming a concern in many industries, including data centres. How do you think the industry can ensure its sustainability initiatives are credible and avoid accusations of greenwashing?
Ryan: A consistent framework for measurement and tracking sustainability initiatives is required in order to avoid greenwashing within all industries, and particularly the data centre industry. The Science Based Targets initiative (SBTi) is established as the global standard for corporate emissions reduction targets. Over 5,000 organisations have set verified emissions reduction targets since it launched in 2015. All SBTi targets must have a strict absolute reduction target for scope 1 and 2 emissions and also include a separate scope 3 target if these emissions are greater than 40% of the total footprint. SBTi targets are set against sector-specific emissions trajectories. The ICT sector pathways were developed with the International Telecommunications Union (ITU) based on projected growth and efficiency gains. The wording of SBTi targets are set and verified by the Science Based Targets initiative, and follow a common format requiring companies to ‘commit’ to the target that has been established. For Spark this is as follows: Spark New Zealand commits to reduce absolute scope 1 and 2 GHG emissions 56% by 2030 from a FY2020 base year. Spark New Zealand commits that 70% of its suppliers by spend covering purchased goods and services and capital goods, will have SBTi-aligned targets in place by 2026. This means Spark is committed to pursuing this target and we are working towards it.
W.Media: So how do these energy partnerships work on the ground?
Ryan: The energy generated by the PPA Spark has recently signed with Genesis will be zero-carbon and we will be able to count this renewable energy against our market-based scope 2 emissions target through the transfer of Renewable Energy Certificates. These certificates transfer the renewable attributes of the energy to Spark and enable transparent tracking and reporting. In exploring renewable energy partnership opportunities, it was important to us to support investment in new renewable energy generation – rather than buying certificates ‘off the shelf’ for existing renewables that were added to the grid many years ago. It is only through the addition of new renewable sources that New Zealand’s grid will further decarbonise and our country will reach its long-term climate goals. Long-term commercial commitments, delivered by PPAs, also support new renewable generation to become operational faster by providing projects with commercial backing and increasing confidence to invest in further developments. Under the agreement, the remaining 40% of our electricity needs will continue to be sourced from the grid as occurs today. However, as we continue to grow our energy use, and we look beyond our FY30 emissions target to our long-term transition to net-zero, we ultimately aim to transition 100% of our electricity consumption to new renewable sources. The partnership with Genesis includes a commitment to explore additional renewable energy opportunities, supporting Genesis to achieve its target to have 95% renewable generation by 2035.
W.Media: With AI-driven demand being a growing consideration in data centres, do you see New Zealand, particularly locations like the South Island, becoming future AI hubs? What about Auckland?
Ryan: New Zealand has a significant opportunity to become a green data centre AI hub, servicing the AI requirements of not just New Zealand, but potentially parts of the Asia Pacific region. With the global shortage of cost-effective land and power required to support the significant growth in demand, the New Zealand digital infrastructure industry is ideally placed to benefit from global data centre growth driven by AI. The lack of secure renewable energy available in key Asia Pacific markets will likely make the sustainability targets set by major hyperscale cloud and AI providers difficult to achieve in this region, which presents a significant opportunity for New Zealand. This is also enhanced by the strain on power supply globally. This energy crisis is having a significant impact on other major data centre markets, particularly when combined with the sustainability focus from data centre providers and end users. We believe the significant growth of large-scale cloud and AI data centres will initially be developed in Auckland, due to its population and the fact New Zealand’s international connectivity is concentrated in the Auckland market.
W.Media: How do you view the public cloud providers’ (AWS, Microsoft) activities in the New Zealand market? Are they competitors or collaborators in shaping the future of the country’s digital infrastructure?
Ryan: The public cloud providers are an important part of the ecosystem in all major international markets. They are responsible for a significant amount of growth and innovation in markets where they are present. The New Zealand market is no different and these leading international companies have driven a huge amount of advancement for our data centre and cloud industry since announcing the launch of cloud regions here. The launch of a public cloud region requires not just one large data centre, but several data centres. Spark is working closely with all the hyperscalers to provide market leading sustainable solutions to support future AI/Cloud growth in this market. We view the public cloud providers as key collaborators in shaping the future of New Zealand’s digital infrastructure. In some contexts, Spark will be a partner or customer, and in others we are selling them services. Spark is also a key reseller and partner in supporting NZ business and government customers to consume public cloud and associated business applications. We recently announced that we achieved Amazon Web Services (AWS) Premier Tier Partner status within the AWS Partner Network (APN) reinforcing our credibility to help businesses on their AWS Cloud journey. Microsoft recently announced Spark’s hybrid cloud and AI team as the first at-scale cloud launch partner for its New Zealand hyperscale cloud region.
Matt Ryan will be on the discussion panel: “Can data centres in New Zealand deliver sustainability of their own accord?” At the New Zealand Cloud & Datacenter Convention 2024 on 31 October 2024 at the Grand Millennium Hotel Auckland. The convention will look at New Zealand’s unique position in the data centre world and its opportunity to maintain this through sustainable digital growth and all that this approach entails.
To register, please visit
https://clouddatacenter.events/events/new-zealand-cloud-datacenter-convention-2024/
[Author: Simon Dux]
