Datagrid’s ‘waste heat’ available for other Southland uses

Monday, 15 June 2026

For data centres, heat is a waste product. But people in Southland have occasionally managed to find uses for it.

Datagrid has identified the potential for “complementary industries’’ to benefit from its $3.7 billion data centre now consented for development at a 49ha Makarewa site near Invercargill.

Most of the electricity used by data centre servers (computers) is converted into heat, so massive cooling systems are needed to prevent overheating.

Data centres favour cool climate locations for the free cooling from drawing in colder air to minimise reliance on energy-heavy air conditioning, lowering operational costs and carbon footprints.

Datagrid’s environmental project manager Fiona Smith told the recent Murihiku Regeneration wānanga in Invercargil that controlled-environment agriculture could be located near the facility to use that heat.

There was also scope for integration with food production and processing, she said.

Data centres also attract a different sort of heat - criticisms - for their environmental impact and particularly their electricity needs. The facility would become the country’s second highest electricity user, needing 280MW of power, second only to the Tiwai smelter.

Datagrid chief executive Rémi Galasso has countered that the facility would be specifically designed to modulate its load in response to grid conditions, would mostly rely on renewable energy, and could allow generators to expand capacity.

Datagrid had already struck power purchase option agreement to draw 140MW, about half the energy it would need, from Mercury’s renewable generation portfolio which includes the Kaiwera Downs wind farms.

Demand for data processing was being driven by cloud computing, artificial intelligence and digital services - “and it is growing exponentially,’’ Smith said.

At the same time, global tech companies were under increasing pressure to put their infrastructure in places that offered reliable, low carbon energy and long-term scalability.

Southland delivered what hyperscale operators most needed - competitively priced renewable power, robust grid connections, low seismic risk and a cool climate that kept energy use down, in a region which could provide skilled local workers, strong community support and an enviable lifestyle.

Datagrid planed to run an undersea cable connecting Southland through the Tasman Ring network to Sydney, Melbourne, “and the world’’.

“Currently New Zealand is using AI (artificial intelligence) while other countries are producing AI,’’ Smith said.

“This puts New Zealand in the AI game.

“Our goal is to take Southland’s natural advantages and convert them into long-term economic value. Rather than exporting raw potential you’re exporting high-value digital services.

The company has reported that construction alone would create thousands of high value jobs and inject $2.5 billion into the New Zealand economy.

Even as the pros and cons of data centres continue to be debated Datagrid contends that once operational, its Southland presence would generate hundreds of millions of dollars in annual data service exports, add $US36 million to GDP, drive major new renewable projects in the region and beyond, and support fast, reliable internet nationwide.

It would start the creation of a circular resource-efficient systems where infrastructure actively supported other sectors, creating digital economy hubs, Smith said.

The regions that most early aligned energy, infrastructure and community would capture the greatest value, she said.

“Southland already has what it needs. The opportunity now is to act with intent and alignment, because what we build here has potential to define the future, economically, environmentally and socially.’’