When 100% New Zealand-owned data centre operator T4 Group acquired land in Invercargill on the South Island last April to build what it describes as the nation’s first Tier IV data centre, the company signalled its intent to do things differently. In the first instance, the operator wanted to get away from “Auckland centricity” of the DC sector – the company has data centres on the North Island in Whangārei and Auckland. Secondly, T4 signalled its intent to walk-the-walk using renewable energy rather than rely on potentially misleading “greenwashing” claims with practices such as carbon credits.
“Auckland hosts nearly 90% of New Zealand’s data centres, a concentration that might seem logical given the city’s population size. However, when examined through the lens of national resilience and risk, this centralisation is deeply concerning—especially given New Zealand’s current low-latency infrastructure,” T4 Group CEO and CRO Dean Addie told W.Media.
“Most of these data centres are clustered in a single Auckland suburb, situated on floodplains or volcanic fields—some of the most expensive and risk-prone land in the country,” he added.
Compounding these geographic risks, Auckland faces ongoing power challenges: an insufficient supply, reliance on ∼13% brown power, and a single source of electricity. Addie said these factors make Auckland one of the least suitable locations for Data Centres in New Zealand. The city’s sub- tropical climate also necessitates higher energy consumption for cooling, further weakening the case for Auckland as a data centre hub.
He said adding to the urgency is the looming threat of the Alpine Fault 8 (AF8) earthquake. “With a 75% chance of this occurring within the next 50 years and an 80% likelihood of it reaching a magnitude of 8, such an event would effectively split the South Island in two, cutting off power to the North Island—a disruption that could last for months,” he warned. “A seismic event (AF8) or flooding in Auckland could severely compromise the entire country’s access to data.”
Addie said the focus needs to shift away from Auckland to building regional data centres throughout the country. He added that this must happen at the same time as investing in additional green energy generation in the North Island to reduce dependence on South Island power.
“T4 has a strategy to deploy a resilient New Zealand wide colocation DC network,” he said. “Two main hubs in Auckland and Invercargill and multiple regional DCs will give ‘NZ Inc’ better resilience and connectivity than the current state.”
Power challenges
T4 Group CTO Jason Porter said electricity prices are expected to rise over the next 2-3 years due to increasing demand and constraints in transmission and distribution. Meanwhile, the current pricing structure – encompassing energy, network, and compliance costs – continues to present challenges for consumers and businesses alike.
T4 Group has already successfully locked-in current energy prices for customers until the end of 2028 but Porter emphasises that, more importantly, the operator is committed to using the latest technologies and industry-leading practices to optimise energy use.
“Some data centre operators in New Zealand claim to be ‘net carbon zero’ or promote other sustainability credentials,” said Porter. “However, these claims can be misleading, particularly for North Island data centres that rely on a power grid where around 13% of the energy comes from non-renewable sources.”
“New Zealand is well placed globally from a green energy perspective,” Addie added. “However, Auckland has some brown power in the mix and the brown electrons can’t be separated from the green electrons, so the sector needs to provide more visibility.”
Vague or misleading sustainability claims are problematic. “For example, some data centres highlight their use of renewable energy without disclosing that fossil fuels may still be used during periods of high demand,” said Porter. “Additionally, once electrons enter the power grid, they become indistinguishable, making it impossible to track whether a data centre’s electricity truly comes from renewable sources.”
He added: “The idea that electrons from renewable sources can be separated from those generated by fossil fuels is scientifically impossible. Thus, relying on green credits or making claims of 100% renewable energy can constitute greenwashing.” In contrast, T4 Group, for example, is implementing solar power across all its locations to reduce reliance on non-renewable energy in its North Island facilities.
“Instead of providing a green certificate to clients, which is some operators’ current practices and is generally greenwashing, we should hold different discussions and show what has been done to reduce reliance on fossil fuels and other sustainable practices,” said Addie.
He used Auckland as an example of the indistinguishable power mix: “The region has one grid exit point GXP for power (Otahuhu), meaning not enough power [to support DC growth] and it is not 100% green power because Huntley Power Station is always in the mix.”
Sovereign means sovereign
Addie believes that the T4 Group – which is 100% kiwi-owned with partial Māori ownership – will hold its own against bigger rivals when ensuring digital data is subject to the laws and governance structures within the nation it is collected, stored or processed.
“Data sovereignty ensures that sensitive information is protected according to New Zealand’s robust privacy laws. It also mitigates risks associated with data being stored or processed in foreign jurisdictions with less stringent data protection regulations,” said Addie.
“No public cloud can claim sovereignty, regardless of where the servers are located,” he said, adding that public clouds are nevertheless important elements of companies’ tech stacks. “When sovereignty and security are not as important in some functions, then the cloud can be a good option for those functions,’ he said. “Other functions in the stack that need sovereignty and security, and lower cost alternatives, can be better provided in true sovereign colo.”
“When your data is kept locally, you have greater control and can respond swiftly to any issues. This is particularly critical for sectors dealing with highly sensitive information, such as finance, healthcare, and government,” he said. “Data sovereignty ensures that sensitive information is protected according to New Zealand’s robust privacy laws.”
Addie said US-owned data centres that operate outside the US are governed by US laws including The Patriot Act, Foreign Intelligence Surveillance Act, and the CLOUD Act which enables US law enforcement agencies to compel US-based tech companies to provide data stored on servers, regardless of whether the data is located within the US or abroad.
“Australian-owned data centre companies that operate outside Australia are governed by similar laws,” he said. “New Zealand also has Mutual Legal Assistance Treaties (MLATs) with several countries, including Australia and the US. Through an MLAT, a foreign government can request access to data stored in New Zealand.”
AI’s impact in NZ
Addie said that while AI is still in its infancy in New Zealand, it is definitely not a fad and, as it develops, will become an enabler for global societies. “As it iterates there will be improvement in processing requirements but there will still be need for more power and distributed locations,” he said. “T4 already is fully enabled for AI with 150kW/rack liquid cooling already installed.”
He added that Invercargill will have a big advantage when the market develops. “Cooler climates are attractive for AI platforms and the South Island is well placed given its average annual temperature of ~10 degrees Celsius (~50 degrees Fahrenheit), plus we’re using renewable energy sources and eco-friendly design to diminish its carbon footprint,” he said.
Dean Addie will be joining 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 New Zealand data centre sector’s rate of growth has raised a number of operational and strategic questions. A situation where local data needs to be housed in facilities overseas can raise issues of jurisdictional risk and that the data housed overseas need to follow overseas rules rather than the rules of the country where the data originated. Recent local growth can be linked to a
number of key colocation providers as global cloud providers appear to be at the initial stages of their entry into the New Zealand market. Questions have also been raised as to whether the power grid can cope with the demand of more data centres.
Other challenges faced by local digital infrastructure are those faced by the sector elsewhere around the world – designing and fitting out for high growth, attracting and retaining skilled staff, meeting the full range of sustainability responsibilities beyond energy use including Scope 3, diversity, social and economic impacts.
This 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]