At risk of being churlish, Jonathan Milne argues Amazon Web Services must invest not just in jobs but also in utility-scale renewable energy projects to power the three or more big NZ data centres it announced this week.
Analysis: There is justifiable excitement at Amazon’s promised $7.5 billion investment in building at least three big data centres on the periphery of Auckland, and the 1000 new and flow-on jobs. But with this must come questions about how these new computer processing hubs help – or hinder – our emissions reductions.
Because of course, ‘the cloud’ is not really in the sky. It’s firmly grounded in banks of computers dotted around the world. Yesterday’s Amazon Web Services announcement follows news of similar (albeit smaller) data centres to be built here by Microsoft, Australia’s CDC and UK-based Lake Parime.
The Lake Parime data centre will be near Clyde Dam in Central Otago, and powered by the dam’s owner Contact Energy. But the others are all expected to be near Auckland, for easier access to the customers who will store their data, and to the undersea fibre cables.
That reduces latency – the lag time on uploading and downloading data. But it also worsens an imbalance in New Zealand’s power network. Our power generation is 80% renewable, but much of that is from the southern hydro lakes.
Most of the demand is in the North Island, where there is far less renewable power generated – the wind farms and existing geothermal generators aren’t a patch on the big southern dams. It’s expensive to transmit the power north, and there are technical constraints on doing so.
That’s why Lake Parime is building its data centre by the Clyde Dam. And that’s why Meridian is looking to build a big hydrogen processing facility in Southland, to suck up the renewable energy that suddenly becomes available when Tiwai Point aluminium smelter powers down at the end of 2024.
Amazon boasts that it is on track to powering all its global infrastructure with 100% renewable energy by 2025. It is the world’s largest corporate purchaser of renewable energy, and its local spokesperson points out to me specific strategies: energy efficiency, investing in off-site and utility-scale renewable projects, and deploying rooftop solar systems on its buildings. The company will actively push for government policy that expands the provision of clean energy for Amazon and its customers.
“Organisations that move compute workloads to the AWS Cloud can benefit from the net effect of Amazon’s sustainability efforts to reduce their carbon footprint,” the company says.
In December 2020 the company announced 26 new utility-scale wind and solar projects in Australia, France, Germany, Italy, South Africa, Sweden, the UK and the US. It has 232 renewable energy projects across the globe, with more than 10 GW of capacity – enough to power the equivalent of more than 2 million US homes for one year. Except that power is already spoken for by Amazon’s own operations.
The company has been slated for its carbon footprint, and is anxious to offset that criticism. Tim Dacombe-Bird, Amazon Web Services country manager for the public sector, said the New Zealand operation would be sustainable. “We believe it is vital that growth in the cloud is driven in the most sustainable way.”
To manage expectations, it should be noted that while Amazon promises to create 1,000 new jobs, the fine print discloses that it will hire only 200 people. The remaining jobs are hypothetical flow-on employment growth in sectors like telecommunications, non-residential construction, electricity generation, and data centre personnel, modelled in an economic impact study.
And while the company refuses to say how much of the new capacity will be built new, it does say the capital expenditure will include tailoring both new and existing data centre space to suit its specifications. If will keep expanding in response to customer demand, it says.
Lines company Vector (one of Amazon’s cloud computing clients in NZ) has already signed a deal with Amazon Web Services to jointly develop a “New Energy Platform” that, according to Reseller News tech writer Rob O’Neill, will deliver advanced meter processing from 30 minute to five minute intervals in Australia and New Zealand. In the future this should enable energy and utility companies to develop innovative solutions and new market models that accelerate the uptake of renewables and electric vehicles, they say.
“We are thrilled to see high quality, blue chip companies with a shared ambition to reduce global warming, wanting to come to New Zealand to tap into our unique undeveloped renewable energy resource which in turn provides the opportunity to build out those developments. We think this is fantastic.”
– Mike Fuge, Contact Energy
Three years out from opening, Amazon hasn’t yet inked a deal for electricity supply. Mercury Energy (another Amazon cloud client) wouldn’t say whether they were in talks, citing commercial sensitivity. Genesis Energy said it was not in talks.
Contact Energy (yep, another cloud computing client) says it isn’t in specific conversations. Chief executive Mike Fuge tells Newsroom they are keen to talk with Amazon Web Services about providing renewable energy to the new data centres.
The company is already building a 152MW geothermal power station at Tauhara near Taupō, and Fuge says they’ve made no secret of their ambitions to invest in more low CO2 renewable geothermal power.
“We know NZ’s high levels of renewable electricity are appealing to data centre operators and there are obvious environmental and economic advantages to being in this part of the world,” he says.
“With companies like Microsoft and Amazon Web Services wanting to build data centres closer to Auckland, this only strengthens the opportunity,” Fuge says. “We are thrilled to see high quality, blue chip companies with a shared ambition to reduce global warming, wanting to come to New Zealand to tap into our unique undeveloped renewable energy resource which in turn provides the opportunity to build out those developments. We think this is fantastic.”
That’s the thing: much of that renewable energy resource remains undeveloped.
And one of the big difficulties is financing. Mercury chair Prue Flacks warns of the challenge financing the new renewable energy plants, arrays and farms that NZ needs to meet its 2050 goals. We’d have to build a new wind farm every nine months, she says.
So, as much as Amazon’s commitment to spending and jobs is welcome, what NZ really needs is for the company to commit to investing here in utility-scale renewable energy – in line with its own global strategy.
Without doing that, the new data centres will only exacerbate NZ’s north/south imbalance, and heighten the risk of more power outages like those we suffered last month.