17 Oct 2022

Long term job creation in new data centres unclear

9:03 pm on 17 October 2022
Data storage and cloud computing computer service business concept, showing a server room interior in a data centre.

About a dozen data centres are being planned or built, most for the Auckland region. Photo: 123rf

The Ministry of Business, Innovation and Employment (MBIE) has produced just one report on prospects for job creation from multiple billion-dollar data centres being set up here, according to an OIA response.

About a dozen data centres are being planned or built, most for the Auckland region.

Amazon Web Services (AWS) has three data centres which it has said would employ 1000 people. DCI is building two in Auckland and has said the second of these would employ about 250 people in "supporting ICT industries".

While construction is already employing at least several hundred people, centres themselves are not typically big employers once they are up and running.

The report from MBIE, which focuses on one data centre, near Invercargill, appears to back this up.

"Although the data centre will create a number of well-paid ongoing jobs, the project's impact on the region's transition will be limited," the report said.

RNZ had asked MBIE for the two latest, substantive reports it had on jobs kind related to data centres. "The ministry has identified one document in scope," it said.

Asked why it had only one report, that touches briefly on jobs, MBIE said the Department of Internal Affairs (DIA) was the lead agency for this work. "The mention of job prospects for data centres in the MBIE briefing document … was information that was originally sourced from DIA," it said.

DIA has not provided reports on jobs in the information RNZ has previously sought from it about data centres.

The 11-page briefing was for the ministers of of energy, regional development and digital economy ahead of their meeting in March 2021 with two companies; Datagrid, which has approval to build the data centre in Southland, and Hawaiki Submarine Cable, since bought by BW Digital, which is putting in an undersea cable.

The briefing said the chief executive officer of both companies, Rémi Galasso, wanted the government to commit "to be an anchor client" of both the cable firm and the data centre.

This would be by buying capacity before the cable was laid, helping the project secure financing, it said.

The data centre could act as "backup for government data that may be housed in future data centres, such as Microsoft's proposed New Zealand facilities".

The officials suggested taking a further look at this though it is not clear whether that has been done.

The briefing shows the target market of both projects is Australia.

The paper contains discussion of electricity supply. Data centres use a lot of power, putting extra demands on the country's transmission system.

The briefing said Datagrid wanted to use electricity left surplus by the Tiwai Point aluminium smelter closing, to expand the data centre from 25,000 up to 40,000 square metres, and power demand from 40 megawatts up to 100 megawatts .

But that closure, once slated for December 2024, is now no longer happening.

In a statement to RNZ, Galasso said the smelter staying open had no impact on their plans as there was enough power to serve both the Tiwai Point smelter and Datagrid data centre.

The briefing said the cable was being put in partly to make the data centre run faster for its "target market in Australia via the Southland region".

It said Galasso suggested the Chatham Islands could be hooked up to it, and MBIE had given him information about connectivity to the Chathams. "We understand Hawaiki is also planning links to Melbourne and McMurdo Base with an option to connect to Scott Base in Antarctica," the OIA briefing said.

Galasso has confirmed the cable company is still studying links to the Chatham Islands and Antarctica.

The ministry was also asked under the OIA for its latest two briefings of any minister about data centres and jobs. It released none.

NZ Trade and Enterprise did a study into data centre markets but did not look into jobs.