[+] Drowning in Data: Seabed Solutions to Asia-Pacific’s Storage Needs

A few years ago, Microsoft was completely at sea. It was running an experiment, Project Natick, off the shores of the Orkney Islands, trialling an underwater data centre, Northern Isles, 117m below sea level after first sinking servers underwater in 2015. Since 2020, there has been no word about Project Natick though Microsoft claimed the trial had been a success. But across the world, in the Asia-Pacific region, the data centre market is booming. And some of it might end up underwater. Underwater data centres So why underwater? Data centres use up a lot of energy not just to run the racks and racks of servers they have but also to cool the servers down. One of the two main reasons to move them underwater is to save energy costs by using the water as a natural coolant. Another reason is that it would free up land above sea level for other much needed uses such as housing. But the underwater move comes with its own set of problems. Large enough, easily accessible sites within jurisdiction have to be found and there is also seafloor stability to be considered as underwater environments, particularly marine ones, are subject to geological, temperature, weather and pressure changes that need to be designed and accounted for in the process of planning. That then adds to the cost of building such centres and the knowledge required to do so as well as the work to be done to receive planning permissions. Environmental concerns also exist with water temperature changes and disruption during construction and operation potentially affecting marine life, tourism and fishing industries along coastal areas. And in the Asia-Pacific with its particular blend of geopolitical considerations, data centres set out in marine environments would mean additional defence costs to protect them as potential soft targets. “If the technology can be proven to be stable and provide an operating cost which is lower than being land based then this would lead to industry uptake,” Cushman and Wakefield’s Australia data centres advisory team lead, Alex Moffatt, says. In South Korea, the government announced plans in 2022 for not just an underwater data centre but also an entire underwater mini-city project. ▲ South Korea's underwater project, though a small living project experiment, includes a test of a data centre module. The Korea Institute of Ocean Science and Technology (KIOST) was to develop a $US30.8 million submarine living and working space off the country’s southeast coast near Ulsan and data centres were part of the plan. It was primarily a living space 30m below surface for five people to live and work, with one section dedicated to investigating the efficiency of housing data centres underwater. Ulsan’s mayor, Song Cheol-ho, at the time said it was hoped the project would help develop a marine tourism industry with underwater hotels in the future. “There are high expectations for the development of a unique marine tourism industry, such as the construction of an underwater hotel,” Song said. The government funded more than 80 per cent of the project’s cost with it scheduled to last five years and said it chose Ulsan because of its tides, water temperature and stable seabed. In the US, a business called Subsea Cloud is promising to sink data centres down to depths of 3000m below sea level to help prevent hacking attempts but has not progressed to building any centres. China’s Government announced in December 2023 that it would embark on the Hainan Undersea Data Center off the coast of Sanya, in China’s Hainan province to save on energy costs and land. ▲ One of China's underwater data centres being installed (Image courtesy of Tang Fei/China Daily) The current market Data centres are hot— across the Asia Pacific region, there is a shortage of them, demand is growing and investors are keen to buy up what they can and Malaysia is leading the charge. Malaysia’s proximity to Singapore allows it access to transport and telecommunication networks but land is cheaper and more widely available than in Singapore which has a history of being landstrapped. In 2019, Singapore paused new data centre development, allowing Malaysia to woo big firms to build in Johor State’s Iskandar Puteri, just 30 minutes from the Singapore-Malaysia border. US firm Equinix, who has also recently signed an energy deal with Australia’s largest wind farm, has begun building a $40-million data centre there. Other projects include China’s GDS Holdings’ 69.5mW centre in Johor State and Japan’s NTT’s sixth data centre near Kuala Lumpur. ▲ China's GDS Holdings has just started operating a 69.5mW data centre in Malaysia's Johor State. Malaysia’s Government is waiving taxes for digital infrastructure providers and its state utilities are providing a steady supply of energy for the centres. “Malaysia is the fastest growing market in the region with ongoing interest and growth in both Kuala Lumpur and Johor,” Moffatt says. “With 1.2gW of development pipeline under way, Malaysia, which currently has 189mW of operational capacity, will see a 600 per cent growth in the next five years.” Malaysia isn’t the only country that is keen on this market. Brookfield-owned data centre firm DCI has just started building its first data centre in Seoul with conglomerate Daelim. The company now owns 130mW across more than 10 sites in Sydney, Canberra, Adelaide and Auckland but is keen to expand into Asia. “Seoul is one of the fastest-growing data-centre markets in Asia and we will continue to support this growth further for our global customers and investors,” Brookfield global data centre platform chief executive Udhay Mathialagan says. Goodman has signed contracts for a data centre in Japan, started construction on a Hong Kong data centre and is setting up a branch office in Singapore to manage its projects in the region. “The data centre sector is an area of growth for Goodman, with Asia continuing to be a key focus given the market’s demand and supply dynamic,” Goodman head of Asia Paul McGarry says. “We’ve got the capital, land and secured power, which combined with our proven engineering and delivery capability, will enable us to continue to deliver large-scale, high-value, data centres.” ▲ Goodman’s recently opened data centre in Hong Kong, the Goodman Tsuen Wan West precinct. Google has also announced new data centres in Malaysia, Thailand and New Zealand with Thailand also offering tax breaks and Vietnam’s legislation requiring companies to keep customer data within national borders boosting demand. “Hyperscalers and major operators are undertaking multibillion-dollar self-build programs across the region,” Moffatt says. “In addition, Blackstone and similar funds have committed to investing billions in data centres globally including the APAC region,” “Sovereign wealth funds are also investing in the region with mandates to secure assets throughout APAC.” Last month, eight global data centre firms created the first Asia-Pacific trade association, the Asia-Pacific Data Centre Association, to advocate for policies and regulations to help the region’s industry grow. Founding members include companies representing 40 per cent of the region’s market apart from mainland China: AirTrunk, Digital Reality, Equinix, Global Switch, NTT Global Data Centers, Princeton Digital Group, ST Telemedia Global Data Centres and Vantage Data Centers. The organisation will be a sister organisation to the European Data Centre Association. The market in Australia At home, things are looking up with Sydney pinpointed as one of the top desired locations for data centres. Meanwhile, Microsoft is quietly progressing on its plans for several data centres in Melbourne. “All of the major investors that we meet with have indicated they have an investment mandate for data centres in Australia,” Moffatt says. “Cushman and Wakefield currently have in excess of $US5-billion investment mandates from our clients looking to secure data centre assets in Australia.” The attractiveness of Australia and the Asia Pacific region for investors will only increase further with Google's recent announcement that it will join the Humboldt project to build a subsea cable between Chile, French Polynesia and Australia. That cable will move Google Cloud under the sea, speeding up the delivery of its services including its own data centre in Quilicura, Chile. It will link up the cables making up the South Pacific Connect project with a cable linking Chile and French Polynesia. ▲ A map of the Humboldt subsea cable from Chile to Australia which will increase demand for data centres in the region. “This new cable route will enhance Australia’s global connectivity and complement our work with Pacific countries to secure better access to the global digital economy,” Australia’s federal communications minister, Michelle Rowland, said. “All new cable projects open up additional capacity so there will be capacity increase, reduced latency and additional redundancy in global connections for Australia,” Moffatt says. Moffatt also says that most investors interested in the Australian data centre market are hyperscalers and operators such as NextDC , AirTrunk , CDC, Equinix, Digital Reality and Macquarie Data Centres and landlords such as Stockland, Goodman Group and CharterHall. Criteria for suitable sites above sea level include the appropriate land zoning, more than 2ha and electricity capacity of more than 50 megawatts. But what about sites below sea level? Moffatt thinks Australia doesn’t need to be worried about that. “Australia has the benefit of plenty of developable land and available electricity which means we do not have the same constraints as Japan, South Korea and Singapore,” Moffatt says. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Drowning in Data: Seabed Solutions to Asia-Pacific’s Storage Needs

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