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A new data center will be built to the left of the Contact Energy offices on the Clyde Dam, as shown in the image.
A controversial data center being built on the Clyde in Central Otago is due to open in October, and power company Contact Energy believes it could be the first of many to be built in New Zealand in the coming years.
The data center will be operated by UK-based digital infrastructure company Lake Parime, which provides services for blockchain and cryptocurrencies, artificial intelligence, data analytics, and scientific modeling companies.
Despite assurances that it will use Clyde's electricity for a mix of purposes, critics fear it will dominate the energy-intensive cryptocurrency mining industry.
Guardians of Lake Dunstan chairman Duncan Faulkner said the plan would see Contact Energy export New Zealand's renewable energy at a time when it had never been more valuable.
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It provided no benefit to the local community, he said.
Other data centers in New Zealand relied on a traditional model that allowed local companies to use and store massive amounts of data.
However, this was specifically designed to allow cryptocurrency mining, he said.
The data center would have 368 servers and cooling equipment housed in eight containers, enclosed by a noise mitigation wall next to the dam.
Tourism Central Otago/Supplied
Critics believe that a data center next to the small town of Clyde will provide little benefit to people who live nearby. (file photo)
Some neighbors have expressed concern about the noise generated by the center.
However, Commissioner Bob Nixon found that it was within the District Plan's noise limits when he granted the project's resource consent on behalf of the Central Otago District Council.
In its request, Contact Energy said part of the deal included moving forward construction of a new Aurora Energy substation, which would benefit the local grid.
There would be no permanent staff on site, but some specialized maintenance staff would manage the servers within the data center.
Central Otago Tourism / Ross Mckay and Will Nelson
The 58 km Dunstan Lake Walking and Cycling Trail between Cromwell and Clyde is open after two years and $7 million spent on construction.
The general manager of Simply Energy, a subsidiary of Contact Energy, Murray Dyer, said the data center was better than traditional models that required a guaranteed 24/7 power supply.
The services provided by the companies working with Lake Parime were not time critical.
โThe key thing is can we turn that up and down so that if that power is needed by critical local businesses and consumers, then we can turn off that data center and that is written into the contract,โ Dyer said.
A statement from Contact Energy and Simply Energy on Friday said the companies were actively seeking to attract new industrial demand for electricity.
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Bitcoin's annual electricity consumption is more than three times that of New Zealand.
No more data centers were planned on the Clyde, but a number of credible data center operators were interested in building data centers in New Zealand over the next few years.
โ[We] they are eager to explore if we can provide them with a renewable energy source.
"The Lake Parime data center is the first project in our portfolio of opportunities to increase industrial demand for electricity from industrial users in the lower South Island."
The company wanted to reduce New Zealand's dependence on the Tiwai smelter, which consumes about 13 percent of New Zealand's energy. The smelter's owners have indicated it could close in 2024.
The data centers that provide power to offshore companies also ensured that renewable generation was used productively rather than being trapped in the lower South Island and wasted as spilled water.
Contact Energy said it had safeguards around cryptocurrency in its agreement with Lake Parime, but declined to detail them in the statement.
โWe are not being vague or cautious about the intended use of the data center,โ the company said.
โLake Parime will use the data center for a wide range of high-performance computing applications. This may include blockchain and cryptocurrencies, but also other decentralized computing activities such as machine learning, economic modeling, and data visualization.โ
The Contact Energy app said that in 2018, data centers internationally consumed about 1 percent of globally generated electricity and demand was expected to rise substantially over the next decade.
