Wed | Sep 18, 2019

New Fortress wooing big tech

Published:Wednesday | September 4, 2019 | 12:21 AMSteven Jackson/ - Senior Business Reporter
Chairman and CEO of New Fortress Energy Wes Edens speaks at the commissioning of the company’s Floating Storage Regasification Terminal in Jamaica on July 19, 2019.
Chairman and CEO of New Fortress Energy Wes Edens speaks at the commissioning of the company’s Floating Storage Regasification Terminal in Jamaica on July 19, 2019.

Natural gas supplier New Fortress Energy, NFE, which operates in Jamaica and the region, plans to develop data centres near to its power plants to serve technology giants.

“At the end of the day, we are supposed to be developing data centres next to all of our power sources, because we think that those two things are so synergistic,” said NFE founder and CEO Wes Edens in a mid-August conference call, the transcript of which was recently reviewed by the Financial Gleaner.

It implies that Jamaica is being considered as one of the locations for the data centres as NFE owns gas assets here, but the company declined to comment further on the plans when asked for more details.

“If we can also support connectivity and technology in markets where we operate, we would be happy to do so. At this point we have nothing further to announce beyond what was said during the most recent earnings call,” the energy company told the Financial Gleaner.

NFE, which is based in the United States, is also doing business in Puerto Rico, Dominican Republic, Mexico and Angola.

Tech companies require large storage complexes for servers to offer cloud computing services. Energy is said to account for nearly three-quarters of the operating costs for these complexes, which NFE says it can offer at a cheap rate.

“We certainly are keen to work with the big data centre users, and we’re talking to all them … really robust discussions with them,” said Edens.

The conference call listed big tech names like Google, Apple and Microsoft.

NFE does not currently have the knowledge base to develop the data centres, which are large industrial buildings that can span over one-million square feet, but Edens says he is open to developing the skills in-house.

“There’s no substitute for actually doing things, to really learn from them,” he said. NFE has 500 MW of power allocated for data centres in various stages of development or negotiation.

Edens said the bulk of the operations at the data centres would be done by the tech clients themselves, and that NFE’s primary involvement would be power supply that’s reliable, redundant and inexpensive.

NFE chief development officer Brannen McElmurray said the top five internet companies spent about US$77 billion on data centre infrastructure in 2018. NFE expects the industry to spend US$120 billion this year, and consume 15 gigawatts of power.

McElmurray said that Microsoft alone is adding about 85 MW of energy per week to keep up with its cloud business.

“So, this is a real trend that we’re following. And essentially, they need the core asset that we’re building, which is reliable, cheap energy,” he said on the conference call.

NFE, which is still in its build-out phase, says that as it continues to add downstream assets it would focus on power plants and data centres.

“So we’re super excited about potentially adding data centre properties as just another thing that we look at as a downstream asset. For the data centre side, these are 24/7 users of power, terrific credits, because they’re typically used by people like Microsoft, Google, Facebook, Amazon and Apple,” said McElmurray. “So, in most of the markets that we’re looking at, the data centre pieces are real potential customer that we can add along to our other power plant and other downstream users.”

Last month, NFE raised US$185 million from a bond issue brokered by NCB Capital Markets Limited. The proceeds will fund construction of a combined heat and power plant in Clarendon to supply electricity to power utility Jamaica Public Service Company and steam to alumina producer Jamalco.

New Fortress, which is listed on the Nasdaq exchange, said in market filings that it will build and own the 150-megawatt power plant at Jamalco. The plant is set for testing and receiving its first gas deliveries by the fourth quarter of 2019.

The American company is also the sole supplier of natural gas to Jamaica. It owns terminals in Montego Bay and Old Harbour.

steven.jackson@gleanerjm.com