Artificial intelligence is becoming a big wildcard in how much electricity demand Auckland faces, even as who gets first dibs on power becomes an ever more pressing and unresolved question.
“There’s certainly a global issue… and it’s going to be becoming even more of a one because of the criticality of data centres,” said Simon Mackenzie, the outgoing chief executive of the country’s largest electricity lines company, Vector.
The company’s latest asset management plan said data centres were a driver of growing uncertainty about what to invest where. AI only compounded that.
“Artificial Intelligence (AI) operations and services typically use much more electricity than other types of digital operations, so if customers choose to embrace these services we expect to see strongly increased demand requirements,” the 2025-35 plan said.
Its current forecast is for a 60 percent rise in demand from data centres in the next decade. Considering Auckland uses 1800 megawatts (MW) a day, roughly, then data centres would demand another 700 MW.
But Mackenzie pointed out every previous such estimate had undershot.
The massive power outage across Spain and Portugal last week had only sharpened the global debate about security of supply and who had priority when power was short or cut off, he said.
“Lake levels might be low and people might be called upon to reduce energy – to what degree can they [data centres] actually reduce energy?” he told RNZ.
Their standby generation typically was not enough to meet their full loads.
Data centres did not get any ‘sweet’ deals on transmission deals, though they could pay Vector to get a second ‘pathway’ for greater supply security, Mackenzie said, adding he is not sure how power retail companies treat them.
“How that plays into, you know, what’s happening in the consumer world where, you know, people using AI, or whether it’s hospital or healthcare or running transport systems or anything could become so critical – do they have to actually get treated in a different way?
“But how does that equitably get balanced with other consumers?”
A data centre typically asked for enough electricity to power 8500 homes – but that was just a start, and AI demand could really push that up.
An AI expert at a Waikato symposium recently pointed to a carafe of water, and told the audience using generative AI to produce a page of answers would use that much.
Vector has recently started supplying power to hyperscale centres in Westgate and Albany. They had raised these big questions, said Mackenzie.
“I don’t think that that conversation has been had at a high enough level across the whole industry. The reality is is that in Auckland we’re seeing this play out.”
The Electricity Authority should lead the debate, but this was not a criticism of it as it had a lot on its plate, he added.
Where to spend $6 billion?
Households and businesses nationwide began paying $10 to $25 more this month in charges from the almost 30 lines companies to pay for infrastructure upgrades. The upgrade bill had been approved to hit a maximum of almost $6 billion for the next five years.
But what to spend the money on?
Both Vector and Wellington Electricity’s latest asset updates noted growing investment uncertainty.
“There is increasing uncertainty in the pace for change and affordability of greater electrification”, “uncertainty associated with new and emerging technology” and “uncertainty about whether major customer projects will proceed”, Wellington Electricity said in its news 360-page asset management report.
However, only Vector faced the data centre and AI wildcard, as the ramp up of hyperscale centre construction focused on Auckland.
Microsoft and Amazon were among the big US investors; the local push was coming from Infratil via a $500m data centre fund at Canberra company CDC that Infratil owns around half of.
“There’s now much uncertainty from rapid technological innovation and changing customer behaviours and preferences,” said Vector’s plan.
The first unknown it listed was, “uncertain impact on system growth from hyperscale data centres”.
The centres with the biggest appetites paid extra for a direct connection to lines supply.
“We receive many more customer connection requests for hyperscale data centres than we did just a few years ago. These requests are complex, large, and have significant impact on our future planning for the part of the network they are located in.”
Among the agreed-upon responses to data centres were a $40m investment over the decade in a new CBD zone substation and subtransmission cabling.
Vector relied for demand forecasts on what the data centre operators told it, Mackenzie said.
“They’re very professional, they provide good updates. I think it’s much more about stepping back and looking right across the whole system and really getting to that point around, ‘How does New Zealand cope with data centres?'”
Parts of Europe, Ireland, Singapore and the US had restrictions.
“Some parts of the States… require that if you’re putting in the data centre, you have to, you know, pretty much cover it with building generation at the same time.”
What the government and councils would require of lines companies around making networks more resilient was another big generator of uncertainty, as was electric vehicle (EV) uptake and charging, the asset management plan said.
A move to allow more risky trees to be cut down more easily, announced by the government last week, would be a real boost to resilience, Mackenzie said. But as for EVs, he has had little joy.
He made calls last year for government intervention to encourage much more smart-charging at people’s homes in order to avoid spikes in demand overwhelming the system. That has not happened. It had become less urgent, as EV uptake fell with the cut in government subsidies last year, but demand could easily quickly grow.
The government was changing from grants to low-interest loans to try to get more charging stations built.
“For us it’s really important to have the visibility, and if needs be the ability to, you know, kind of manage the load at different times,” Mackenzie said.
“We still believe that’s an absolute requirement to be able to build smarter.”
