Prime Minister Christopher Luxon. Photo: Marika Khabazi
Amazon Web Services has officially opened its new Auckland data centres, claiming the move will add 1000 jobs.
It has also announced an agreement with the government to train more than 100,000 people on cloud computing, already more than half way to that goal.
The company unveiled the plans in 2021, saying the data centres would open in 2024 - but construction was halted in 2023. As of last December, the plan was to open the data centres this year.
In a statement on Tuesday, it confirmed it was still investing the $7.5b and would support an average of more than 1000 full-time equivalent jobs, adding $10.8b to the economy.
AWS country manager for New Zealand Manuel Bohnet confirmed the data centres were "live" as of on Tuesday. The location of the data centres remains secret for security reasons.
"They're in and around Auckland, so we have enough distance to withstand a scenario like flooding and power outage, but it's close enough for low latency," Bohnet said.
He confirmed the jobs created would be spread throughout the supply chain, and while that would include some roles for operating the data centres, it would also mean telecommunications engineers and other jobs to support the centres.
The announcement also included the launch of a new Asia Pacific (New Zealand) Region for its cloud services including analytics, networking, computing, cloud storage, generative AI and machine learning.
Having the services hosted locally speeds them up, and means New Zealand joins 37 other such "regions" in hosting cloud computing services. The company plans to expand further in future with data centres in Chile, Saudi Arabia, and Europe.
Questions about '100 percent renewable'
Building energy-hungry data centres is a boom industry in New Zealand, with international companies keen to reduce their climate impact by using this county's renewable electricity.
The International Energy Agency says data centres are on track to consume 4 percent of the world's electricity by 2026, and CDC, Microsoft, Amazon and other big players have expressed interest in building more of them here.
Bohnet said AWS had previously done a deal with Mercury so the data centres would be "100 percent renewable from day one", but facing questions from reporters confirmed they would be drawing from the local grid.
"Moving to the cloud gives you four times better efficiencies compared to an on-prem[ises] data centre. Also, we have our own custom-made silicon ... and the latest version uses 60 percent less energy," Bohnet said.
However, Bohnet refused to comment on exactly how much energy or what form of cooling the centres would use, or the timeline for the $7.5b investment.
The agreement with Mercury also meant the Tuatira South wind farm near Palmerston North was built at a larger scale, he said.
AWS' statement also said it had a Memorandum of Understanding with the government to train 100,000 people in New Zealand in cloud computing skills - and was already more than half way to that goal.
Bohnet said he would later outline a new initiative alongside IT training provider Lumify which would get the company another 10,000 closer to the 100,000 goal.
PM hails investment
Prime Minister Christopher Luxon also spoke at Tuesday's launch.
"We know that our firms, when they embrace more cloud based applications and services, are more productive and will make more money and be more profitable than those that don't," he said. "That's why our investment boost product is designed to help support those companies embracing more technology."
"We know that for our public service, there is a huge amount of work to be done to digitize government, and we've just kicked off that work, but we've got a lot more to do in that regard to make our public service behave as large service organisations with customers who happen to be the public of New Zealand."
He also pre-empted the announcement earlier in the day, telling Newstalk ZB the investment was the largest ever publicly announced tech investment in New Zealand.
Labour criticised the interview, saying Luxon was "claiming a $7.5 billion investment in New Zealand as something he's done".
Luxon pushed back on that.
"It's just that it's been launched live today and I was just drawing attention to the fact that it's a significant investment," he said.
"This has been coming for some time. I've been very upfront about that, but I'm just excited the fact that here is an example of what we want to see a lot of."
"The learning out of AWS is: man, it's more expensive to build in New Zealand. The Resource Management consent took a long time. It was very expensive, probably 20 percent more expensive than what they experienced in Australia... that's why we're changing our Resource Management planning acts."
Labour's leader Chris Hipkins, however, refused to back down.
"Christopher Luxon was effectively trying to say that this investment was happening because the government had reversed the foreign buyers ban. I think it's really desperate that he's now back-pedalling so quickly," he said.
Hipkins argued Luxon's reliance on consenting to speed up renewable generation was not good enough.
"When it comes to electricity generation, Christopher Luxon is all hot air and no action," he said. "We need more renewable electricity generation being developed now. Talking about doing it at some point a long way into the future isn't going to help New Zealanders struggling with the cost of living."
A pinch of salt
Tech commentator Peter Griffin told RNZ people should be a bit sceptical of Amazon's claims about job numbers and GDP growth.
"I take them with a pinch of salt. They've added up every dollar and probably things that they've replicated from overseas, like training courses and all of that, they put a value on all of that, added all of that together.
"For the GDP figures they've extrapolated what will happen in the economy: How many more businesses will offer cloud services; will create new applications; will hire more people? ... They're adding all of that up and then probably adding in a healthy margin as well."
The benefits of on-shore data centres for other things like storage were questionable, he said.
"We're talking about milliseconds - and that can be the difference between having a really good experience and not - but, yeah, I think that is potentially overplayed by the data centre operators."
And while Amazon and Luxon alike had talked up the move as being the biggest publicly revealed investment, Microsoft's data centres were of a similar size.
"They didn't come out with exact numbers, I think they pointed to the GDP boost and both [AWS and Microsoft] are claiming billions of dollars in boosted GDP as a result of these investments ... both have committed to three facilities that they don't necessarily own. In the case of AWS, they don't own those facilities they're just putting all of their equipment into them.
"They're probably on par, but it's very competitive and then you've got other players like Google and local players as well, like Spark and Datacom."
However, he said it was a good sign the tech giants were interested in investing in New Zealand.
"We need more of it, and we also need to retain our own autonomy and what they call sovereignty around artificial intelligence. We can't just rely on these three big American tech companies to provide all of our infrastructure when it comes to artificial intelligence."
He said the Auckland data centres were unlikely to be hosting much in terms of large language model AI machine learning - at least to start with.
"I can't see a scenario immediately where we're going to be training large language models in the Amazon data centres in Auckland. You know that sort of stuff is done closer to the action in other countries, in places like Silicon Valley."
The additional demand could also push power prices up further.
"It could do, and it will depend, really, on how soon those artificial intelligence workloads really ramp up in these data centres," Griffin said.
"The government is estimating by 2030, power usage from our own data centres in New Zealand could be up to 7 percent of overall power consumption."
On the other hand, the presence of data centres could also lead to future investment by generation companies into more renewables.
"The key is to get as much renewables in place as quickly as possible. And the energy companies like Contact and Mercury argue that with an anchor, tenants like Amazon committing to 10 years at a reasonable rate, that gives them the confidence to invest in more renewables. So having these big anchor tenants are definitely part of the recipe for getting renewables up and running faster."
The news follows the government's announcement on Monday it would make an exemption to the foreign buyers ban for wealthy investors on the Active Investor Plus residency visa - also known as the "golden visa".
The visa requires investors to spend $5m on high-risk investments in New Zealand over three years.
Houses those on the visa - who do not need to spend six months a year in New Zealand - can buy or build are restricted to those worth $5m or more.
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