The government wants to invest between $25 billion and $35 billion in data centers, and has just assembled some of the country’s most powerful business leaders to make the case.
Last week, about 100 of New Zealand’s most powerful business leaders gathered at the offices of Invest New Zealand, the government agency responsible for attracting foreign investment to the country, on Auckland’s waterfront. They drank wine, ate unidentified fancy hors d’oeuvres, and wore suits costing more than my car.
They included CEOs and senior executives from power companies, construction companies, utilities, technology companies, investment banks, KiwiSaver funds and iwi development units. They were there for what Invest New Zealand CEO Robert Walls described as a “call to arms”. He wanted them all to work together to create a lucrative new national industry: AI data centers.
A report provided to all attendees addressed the potential to attract $25 to $35 billion in private investment in data centers, renewable energy, fiber optics, and transmission over the next five years. We’ve explained why data centers are particularly suited to New Zealand. A cool climate, a stable baseload of geothermal energy generation, and plenty of room to expand solar, wind, and hydropower.
Walls’ opening remarks were followed by a panel discussion led by BCG’s Kelly Newton and featuring Contact Energy CEO Mike Fuge, Mercury CEO Stu Hamilton, and prolific technology industry leader Helen Robinson.
They proposed a vision of the future in which New Zealand builds clusters of data centers in regional areas and harnesses the AI revolution by tapping into a vast network of renewable energy made possible by long-term power purchase agreements with carriers.
Newton said the opportunity was “bigger than anyone expected.” Fouge said this is a “once in three generation opportunity.” He compared this to the invention of frozen meat transport in the 1870s and the wool boom of the 1950s, situations in which technology and global powers presented an opportunity for great profit, and New Zealand was able to take advantage of. Robinson called this “the biggest opportunity but also the biggest risk.”
Overblown and optimistic rhetoric about the wonders of AI is not new to the C-suite. Almost every company’s earnings call these days is filled with stories of AI miracles that will finally liberate companies from the tyranny of workers demanding compensation for their labor. What was different about this panel discussion was that there was no discussion about technology. There is no debate about the benefits or ethics of AI. It’s just a business opportunity. The global demand for computing is increasing, and providing it can make a lot of money.
Invest New Zealand wants to get all major business leaders rowing in the same direction and selling opportunities to the world. They argued that they needed to act quickly because competition was increasing. The Nordic countries have many of the same geographic advantages in terms of geothermal energy and cooler temperatures, and are much more advanced than New Zealand when it comes to developing policy and building business relationships with high-tech infrastructure companies.
The rush may be necessary, but it’s also a convenient selling point for companies that want the country to absorb an unprecedented amount of construction in largely undeveloped areas. There was little discussion of the environmental risks posed by this initiative. That’s not necessarily surprising – this was a sales pitch, not a discussion – but some concerns were waved off a little easier.
The report claims New Zealand had a stronger social license for data centers than most countries in the world. This is partly based on the company seeing local response to its Datagrid data center development in Southland as largely positive. However, this claim stands in contrast to a recent Ipsos Issues Monitor poll that found New Zealanders have a more negative view of AI than their peers. Only 35% believe the social benefits of AI outweigh the environmental costs, compared to a global average of 49%.
Walls downplayed concerns about water consumption that have come to define the backlash against data center development in the United States. He suggested New Zealand could focus on closed-loop cooling systems that circulate the same water multiple times to reduce consumption. However, this is still a developing technology and has not been widely implemented.
The data center developments that Invest New Zealand successfully attracts are their own stories, with potential legal, financial and political challenges. But a broader strategy is already in motion. New Zealand is marketing itself as the home of data centres, whether its citizens like it or not.
The 100 people in that room on Oakland’s waterfront will decide many things over the next five years, including where data centers will be located, how water will be sourced, and how profits will be divided. The people will finally have their say in resource consent hearings and parliamentary sessions, long after those in power have already made up their minds.
