Datagrid says critics describing ‘quite different’ projects to Southland’s data centre

Thursday, 2 July 2026

Though Datagrid has gained planning approvals for its $3.7 billion AI data centre on the outskirts of Invercargill, the project continues to be assailed by critics alarmed by its draw on natural resources and wider concerns about the nature of artificial intelligence.

“These are important questions and people are right to be asking them,’’ Datagrid chief executive Rémi Galasso said.

But the company welcomed “fact-based engagement’’ and several claims from the latest volley, from the Campaign Against Foreign Control of Aotearoa (CAFCA), were describing a project “quite different from the one we have consented and are building,’’ he said.

Datagrid has received local authority and Overseas Investment Office approval for the facility.

CAFCA organiser Murray Horton said the project at Makarewa would require 1 gigawatt of electricity, close to a quarter of the country’s electricity output.

But Galasso said it was public record, and consistent with resource consent conditions, that the facility was designed around one third of that, about 280 megawatts.

CAFCA has previously targeted Rio Tinto’s Tiwai smelter as being the textbook example of ‘’corporate welfare in New Zealand’’. Horton said without those two major consumers the country could use renewable energy generation and better storage and management of supply, to meet power demand in dry years for its hydro schemes.

Galasso said Datagrid was working with energy stakeholders nationally and in Southland “to ensure the facility doesn’t place upward pressure on consumer power prices’’.

It would not be competing for the supply that served homes and businesses, but would be contracted under dedicated long-term renewable arrangements.

“That kind of stable, long-term demand is precisely what gives generators the confidence to invest in new renewable capacity - the investment New Zealand needs to reduce its reliance on fossil-fuel backup over time.’’ Galasso said.

Horton said AI (artificial intelligence) computing centres generated high levels of heat, requiring large amounts of water for cooling.

Datagrid has acknowledged concerns about water consumption for facilties have been well-founded in hot climates, but again it contended the Southland scenario was different.

Southland’s cooler temperatures meant mechanical cooling - the main driver of water consumption in warmer climates - would rarely be needed.

Rainwater from the roof of the site buildings was expected to supply “most or all’’ of the facility’s water requirements.

CAFCA cited worldwide concerns about the nature of AI itself, including as a cause of massive unemployment.

The military’s use of AI and facial recognition tools created “some truly frightening prospects’’ Horton said.

“AI is unprecedented and potentially devastating technology but there has been very little discussion of it in New Zealand,’’ he said.

Galasso agreed that AI posed legitimate questions for society to work through.

“They are, though, a separate matter from whether New Zealand hosts the infrastructure that underpins AI - infrastructure already supporting work in health care, climate science, agriculture and education around the world.’’

“New Zealand can take part in that as a host and beneficiary, or watch the opportunity settle elsewhere,’’ he said.

Horton said the fact that the Overseas Investment Office had approved the facility wasn’t surprising as it approved nearly all projects proposed by foreign companies wanting to operate here.

Galasso said the office’s process had been rigorous and the project’s consents carried the written support of every affected party, local rūnaka and councils.

CAFCA said that while data centres created jobs during their construction phase once they were up and running they were virtually automatic - “and profits flow to the biggest tech oligarchs in the world’’.

Galasso said the picture was broader than the construction phase.

A modern AI campus needed a skilled permanent workforce for operations, security, infrastructure management and technical support.

Beyond direct employment, the investment would catalyse supplier ecosystems, support local government revenue, and position Southland as a hub for the digital economy at a time when the region was seeking to diversify beyond its traditional industries.

He said the company’s investment was among the largest single commitments to Southland’s economy in a generation.

“We see ourselves as a long-term partner in the region, not here to extract value but to build it,’’ he said.

Horton said CAFCA was calling for a halt to all major AI data centres in New Zealand

“Aotearoa has more pressing needs for our electricity resources than turning them over to Big Tech for AI,’’ he said.