A controversial data centre being built at Clyde in Central Otago will be opened by October – and power company Contact Energy believe it could be the first of many to be built in New Zealand over the next few years.
The data centre will be operated for UK-based digital infrastructure company Lake Parime, which provides services for blockchain and cryptocurrency, artificial intelligence, data analysing and scientific modelling companies.
Despite assurances that it will use electricity from Clyde for a mix of purposes, critics fear that the energy-intensive cryptocurrency mining industry will dominate.
Guardians of Lake Dunstan chairman Duncan Faulkner said the plan would see Contact Energy exporting New Zealand’s renewable energy at a time when it had never been more valuable.
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It provided no benefits to the local community, he said.
Other data centres in New Zealand were based on a traditional model that enabled local companies to use and store massive amounts of data.
However, this one was designed specifically to enable cryptocurrency mining, he said.
The data centre would have 368 servers and cooling equipment held in eight containers, enclosed by a noise mitigation wall next to the dam.
Some locals have raised concerns about the noise generated by the centre.
However, commissioner Bob Nixon found it was within the District Plan noise limits when he granted the project resource consent on behalf of the Central Otago District Council.
In its application Contact Energy said part of the deal included bringing forward construction of a new Aurora Energy substation, which would benefit the local network.
No staff would be permanently based on the site, but some specialised maintenance staff would manage the servers within the data centre.
Tourism Central Otago / Ross Mckay & Will Nelson
The 58km Lake Dunstan Cycle and Walking Trail between Cromwell and Clyde is open after two years and $7 million spent on construction.
Contact Energy subsidiary Simply Energy general manager Murray Dyer said the data centre was better than traditional models that required a guaranteed 24-hour, seven-day a week energy supply.
The services provided by companies working with Lake Parime were not time critical.
“The key issue is we can ramp that up and down so if that energy is required for critical local businesses and consumers, then we can turn that data centre down and that’s written into the contract,” Dyer said.
A statement from Contact Energy and Simply Energy on Friday said the companies were actively looking to attract new industrial demand for electricity.
No further data centres were planned at Clyde, but several credible data centre operators were interested in building data centres in New Zealand over the next few years.
“[We] are keen to explore whether we can provide them with a source of renewable energy.
“The Lake Parime data centre is the first project from our pipeline of opportunities to grow industrial demand for electricity from industrial users in the lower South Island.”
The company wanted to reduce New Zealand’s reliance on the Tiwai smelter, which consumes about 13 per cent of New Zealand’s power. The smelter owners have indicated it may close in 2024.
Data centres providing energy to offshore companies also ensured renewable generation was used productively rather than being trapped in the lower South Island and wasted in the form of spilled water.
Contact Energy said it had safeguards in place around cryptocurrency in its agreement with Lake Parime, but declined to detail them in the statement.
“We are not being vague or cagey about the data centre’s intended use,” the company said.
“Lake Parime will use the data centre for a diverse range of high performance computing applications. This may include blockchain and cryptocurrency, but also other decentralised computing activities such as machine learning, economic modelling and data visualisations.”
The Contact Energy application said that in 2018, data centres internationally consumed about 1 per cent of globally generated electricity and demand was expected to substantially increase in the next decade.