Skills the final hurdle for data dream

Western Australia could be on the verge of becoming a global data powerhouse, driven by the growing data centre industry and strategic investments in undersea cable infrastructure.

With the world’s increasing dependence on digital infrastructure, WA’s location, access to renewable energy, and expanding telecommunications network offer plenty of upside in the data economy.

The state is positioning itself as a vital link between Australia, Asia, and the rest of the world, leveraging both local and international data connectivity.

The gateway

WA’s proximity to Asia, one of the world’s most digitally advanced and fastest-growing regions, makes it an ideal location for international data traffic in terms of the growing uptake of artificial intelligence (AI), cloud computing, and the Internet of Things (IOT).

One of the more significant projects involving WA is the Darwin-Jakarta-Singapore Cable (DJSC), built by Sydney-based IT company Vocus.

This cable system, which connects through Port Hedland, provides 40 terabits of international capacity, directly connecting WA to Singapore, which is one of the world’s busiest data hubs.

Furthermore, Vocus’s Project Horizon, a 2,000-kilometre fibre optic network from Perth to Port Hedland, is poised to revolutionise data connectivity in the resources-rich Pilbara region.

“The future here will be shaped as much by the data streams and satellite beams above the ground as the resources below it,” Vocus chief executive Andrew Wildblood told the recent Pilbara Summit.

“To fully capitalise on these advanced capabilities, the Pilbara needs digital infrastructure on par with Sydney or Singapore.”

The significance of this network infrastructure cannot be overstated.

It not only connects the mining and resources sector to low-latency, high-performance cloud computing, but is a significant first step in transforming WA into a global connectivity hub.

Vocus chief customer officer Matt Walsh said the company’s subsea cable infrastructure was helping to maintain reliability for one of Australia’s most important sectors.

“It provides connectivity via Port Hedland and then onto Perth, Singapore and Indonesia as well,” he said.

“So that’s a real key driver for most customers that are wanting not only diverse network connectivity options, but triversity and quadversity, which is a growing discussion among customers for disaster recovery and network resilience.”

Mr Walsh said the Pilbara remained under-serviced in terms of network connectivity.

“We’re also continuing to invest in our long-haul network reach by upgrading our cable system from Perth to Geraldton, then connecting it up into the Pilbara, which is an under-serviced area,” he said.

“It is opening more opportunities for further data centre investments through the state and we’ve seen new data centres open in Port Hedland and Newman recently.

“And that is going to continue to take place as there’s more and more demand for cloud-based services and take up of AI by businesses and consumers at large to drive greater demand for telecommunications networks and data centres around WA.”

Data centres

Data centres form the backbone of WA’s push to become a leader in the global data economy.

With the surge in demand for cloud computing, data storage, and AI capabilities, the need for robust data centre infrastructure is critical.

In fact, in the latest Global Data Survey from professional services firm Turner & Townsend, 83 per cent of respondents said data centre construction had struggled to meet industry demand in 2023.

And while demand was so strong that 79 per cent of respondents said they believed the data centre sector was ‘recession-proof’, delays or challenges in securing power to sites had severely affected data centre delivery for 80 per cent of those surveyed.

Turner & Townsend data centre lead Australia and New Zealand, Simon Kearney, said power availability was top-of-mind for many providers, with 92 per cent of respondents saying access to power was more important than the location of the data centre.

“Power availability and capacity will continue to challenge developers and operators in 2024 and beyond,” he said.

“As demand accelerates for new data centre developments across the region, reducing their environmental impact is one of the biggest challenges the industry faces, with pressures from customers, investors and regulators to deliver sustainable solutions.”

Fortunately, WA’s combination of energy costs, abundant renewable resources, and favourable regulatory environment make it an attractive location for data centre expansion.

A report by infrastructure specialist firm Presync, commissioned last year by sustainable data centre business GreenSquareDC, found WA had one of the lowest delivered electricity prices among major data centre markets, at $132.36 a megawatt-hour.

That figure was much lower than other key data centre markets such as Singapore at $456.28/MWh, the US at $205.97/MWh, and NSW at $206.01/MWh.

This cost advantage has made WA a focal point for new data centre developments.

For instance, GreenSquareDC plans to build a $1 billion, 96MW green AI data centre – the WAi1 – in the Perth suburb of Belmont.

The company will develop an accompanying 300MW wind and solar farm to complement the facility, positioning WA as a global leader in renewable-powered data infrastructure.

GreenSquareDC founder and chief executive Walt Coulston highlighted the strategic importance of WA’s energy landscape.

“WA has some of the cheapest per-megawatt power on Earth,” Mr Coulston told Business News.

“We want to create a pathway to a true net-zero future for our customers and investors.

“While we considered and will commit to other locations, Perth stood out for its robust renewables energy infrastructure, favourable climate, and proximity to key growth markets.

“For green data centre investors, Australia’s stability and renewable energy capacity is incomparable to anywhere else in the Asia-Pacific.”

As more global companies seek to reduce their carbon footprints, WA’s green energy initiatives provide a strong case for international investment.

And while some WA companies are focused on generating green energy innovation in data centres, others are looking to cut energy consumption, both at home and abroad.

West Perth-based DUG Technology recently signed a landmark deal to license its innovative immersive cooling systems to US company Baltimore Aircoil Company.

DUG’s immersion-cooling technology, DUG Cool, removes the need for resources-intensive fans, air-conditioning and refrigeration in data centres, and instead involves the submersion in water of computer and graphics processing units.

The deal grants BAC – one of the world’s largest providers of data centre cooling – exclusive worldwide licence to use, manufacture, market and sell DUG Cool.

The technology is among the greenest solutions to data centre cooling on the market, providing a 51 per cent reduction in power consumption versus traditional air-cooled data centres.

Water usage is reduced by up to 25 per cent.

Matt Lamont says the DUG Cool design has been refined through production use for more than a decade.

DUG managing director Matt Lamont said the new partnership was poised to revolutionise the data centre cooling market.

“Our patented DUG Cool design has been refined through production use for over a decade,” he said.

“Our Skybox data centre in Houston is among the largest single-phase immersion cooling deployments in the world.

“This agreement will pair our design, know-how, and reputation with BAC’s scale, manufacturing prowess, and respected brand to position us to take advantage of a shifting and rapidly expanding data centre cooling market.”

BAC president Don Fetzer said the agreement would allow the company to take a step forward in providing sustainable cooling systems.

“Our combined expertise, along with our global manufacturing footprint, ensures that we continue to lead the way in addressing the challenges of high-density computing, in line with our vision of reinventing cooling to sustain the world,” he said.

Renewable power

WA’s renewable energy resources, particularly wind and solar, are a game-changer for the state’s ICT ambitions.

The state’s vast landscapes and abundant natural resources offer immense potential for generating clean, affordable energy, making it an ideal location for data centres that require significant and reliable power supplies.

The transition to renewable energy is not just about sustainability; it is also about creating a resilient and cost-effective energy system.

However, there are challenges on the horizon.

A report by the Australian Energy Market Operator (AEMO) in June warned that significant investment is needed to replace ageing coal-fired power stations, such as that in Collie, to maintain low electricity prices post-2027.

The success of WA’s data centre industry will depend on continued investment in renewable energy projects, ensuring a stable and affordable power supply for years to come.

With global tech giants such as Microsoft and Amazon pushing for greener energy solutions, WA’s capacity to deliver renewable-powered data centres could be a significant selling point for investment, should the state deliver on its potential.

As GreenSquareDC’s Mr Coulston points out, the stability of Australia’s political environment and its renewable energy capacity make WA an unrivalled location for data centre investment in the Asia-Pacific region.

AI, automation

While WA’s mining and resources sector has long been the foundation of its economy, the integration of AI, automation, and real-time data analytics is taking this industry into a new era.

The sector is rapidly adopting new technologies to improve safety, efficiency, and sustainability. From autonomous haul trucks to AI-driven exploration and predictive maintenance, WA’s mining companies are at the forefront of technological innovation.

The development of edge data centres, such as that by IT services company NEXTDC – the PH1 in Port Hedland – is crucial for this transformation. Edge data centres allow real-time data processing closer to the source, reducing latency and enabling faster decision-making.

This marks a big step forward for industries such as mining, where operational efficiency is at a premium.

“When sensors are collecting data, AI models are analysing it, and decisions need to be made for an autonomous truck or drill rig, speed is critical,” Vocus’s Mr Wildblood said.

This kind of infrastructure is also essential for sectors such as energy, defence, and logistics. Skills gap

Despite WA’s strengths in digital infrastructure and renewable energy, the state faces a significant challenge in its ICT sector: the shortage of skilled workers.

The Australian Information Industry Association’s (AIIA) 2024 Digital State of the Nation Survey found 99 per cent of respondents believed graduates from vocational education and training (VET) and higher education programs were not job ready.

While there has been some improvement in recent years, with fewer businesses citing a lack of skilled workers as their primary barrier to growth, the skills gap remains a pressing issue.

IT services provider KineticIT’s government, education and critical infrastructure group executive, Wayne Berriman, said skills had been a barrier to expansion, but the company had focused on internal training to plug gaps left by the higher education sector.

Wayne Berriman says it’s challenging for educational institutions to offer all of the skills the sector needs.

And while KineticIT had been named one of Australia’s best-managed companies three years running, he said it still struggled with skills shortages.

“We bring a lot of people in through entry-level roles. A mix of those have done an IT degree, or gone to TAFE or through VET pathways,” Mr Berriman said.

“We have to do a lot of internal training. But I think there’s sometimes a misunderstanding of the complexity of the industry.

“I think from the outside looking in, everyone talks about these shortages, but there are hundreds of roles within ICT and they’re all extremely different.

“It’d be really hard for any educational institution to offer all of those skills.”

Australian Information Industry Association chief executive Simon Bush has called for stronger leadership from the government to foster technology innovation.

“While the tech sector is still growing, it is clear that government inaction and increasing regulation, coupled with developing economic storm clouds, are dampening growth,” Mr Bush said.

“Technology is an enabler across every sector of the Australian economy that will drive productivity growth at a time when economic growth in Australia is flat to negative.”

However, Mr Berriman said he had been impressed by the WA government’s recent response to the digital revolution.

“I certainly think WA has improved in the space. I’ve been in the industry for fourteen years and I remember WA being one of the few states that didn’t have a [digital transformation] strategy, didn’t have a direction, and didn’t have a minister responsible for it,” he said.

“I think over the past seven or so years they’ve made significant progress. They’ve put a minister in charge of it and put together a fairly promising strategy.

“I think everyone will always like more investment, more stability and that sort of thing, but I’m pretty positive about the direction the state is going in and the next few years.”

Currently, there are two federal government funding programs to offset the cost of building green data centres.

The $43 million Industrial Energy Transformation Studies program provides funding for engineering and feasibility studies, so organisations can identify ways to lower energy costs and reduce emissions at their facilities.

Applicants for the IETS can seek $100,000 to $500,000 for feasibility studies or $250,000 to $5 million for engineering studies.

The Clean Building Management Investment Trust reduces the withholding tax concessions for managed investment trusts from 15 to 10 per cent and was extended to data centres in mid-2023.

It applies to data centres that meet the relevant energy efficiency standard where construction started after May 9 2023, and will apply from July 1 2025.

The state’s growing network of undersea cables, such as the DJSC, along with new data centre developments, ensures WA has the connectivity required to serve both domestic and international markets.

By continuing to invest in renewable energy, digital infrastructure and workforce development, WA can solidify its place as a global leader in the data economy.

The coming years will be crucial in determining whether WA can fully realise its potential and emerge as a true data powerhouse.

How they rank

KineticIT remains atop Data & Insights’ ICT rankings, which is based on technical staff numbers within WA.

While the company did see a slight drop in technical staff figures, a strong year included several big-ticket contracts, including an $84.9 million Landgate contract for the provision of a range of IT services, announced in August.

It was the latest in a stream of government contracts for KineticIT, including a $50 million Australian Taxation Office contract and a $23 million deal with the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.

Capgemini and Akkodis retained their respective second and third spots on the ranking, while Deloitte moved into fourth position, above Telstra, after expanding its ICT offerings.