Singaporean tech giant defends Southland ‘AI factory’ promised to add billions to GDP

Saturday, 28 March 2026

Datagrid’s plan for a massive data centre in Southland has critics asking if the digital goldmine is worth the environmental costs. FEDERICO MAGRIN reports.

It started with not one, but two ambitious projects: a 6000km submarine cable connecting New Zealand and Australia, and the country’s biggest data centre.

However, Datagrid’s planned data facility at Makarewa, north of Invercargill, has been criticised for its high water usage and low workforce.

The $3.5 billion data centre, which is projected to have an area similar in size to 10 rugby fields, would require 2453GWh of power per year and employ up to 50 people.

A petition with more than 18,000 signatures is now asking the Singaporean-owned tech company to stop construction.

Waihōpai water and water bankruptcy

High school student Ruby Love penned the petition on change.org and to Parliament.

The 17-year-old wrote a te reo Māori version and another student wrote an English version, citing concerns over combustion emissions.

The data centre received consent to discharge contaminants into the air from 84 diesel backup generators.

Datagrid’s project, which would home AI computing facilities, would use an evaporative cooling system, but some water would still be discharged into the ground as it became too salty to evaporate.

Love said data centres globally contributed to water bankruptcy, in which reserves were drawn down faster than they could recover.

“I want to have a future where I can take showers for longer than five minutes.”

The hyperscaler would be the country’s second-largest electricity user after Tiwai Point, the British-Australian-owned aluminium smelter which employed 1000 people while drawing 5000GWh per year.

While Rio Tinto’s Tiwai Point used 13% of New Zealand’s annual electricity, the data centre would consume up to 6%.

But while the Manapōuri hydro power station was built purposefully to power the aluminium smelter, Datagrid had signed a long-term 140MW deal with Mercury to provide only half of the electricity needed to power the hyperscaler and there were no new renewable projects in sight.

Simplicity managing director Sam Stubbs said the planned data centre would likely drive up the prices of power for New Zealand households.

He said Datagrid was welcome to build it, “but please supply your own power”.

“Southland is being hoodwinked by carpet baggers here, because a few of their residents will get jobs, and the rest of Southland will likely see their cost of living go up.”

Southland Business Chamber chief executive Sheree Carey disagreed, saying the data centre would create regional demand and improve digital connectivity.

Carey said the project was estimated to contribute $2.53b to GDP during the construction phase.

Energy-intensive data centres built by hyperscale technology companies facilitated the flow of data and information, but often attracted concerns about their environmental impact, sustainability and energy supply security.

Resource consent documents showed Datagrid’s ‘AI factory’ would have a maximum intake of 220m litres of water per year.

Based in the Waihōpai Groundwater Management Zone, the 78,000m² centre would extract up to 315,360m³ of water annually via five bores.

The data centre would take about 1m³ of water for every 402m³ of rain that soaked into the ground, on top of the rainwater it planned to catch on the roof to cool down its power-hungry processor units.

University of Auckland computer science senior lecturer Ulrich Speidel said AI at scale required the use of graphical processor units, which generated data and significant heat.

“Between them [Datagrid and Tiwai], there mightn’t be so much power available to send north any more.”

Tiwai Point spokesperson Simon King said the planned AI centre would not affect the aluminium smelters, as Rio Tinto had secured electricity contracts until 2044.

Speidel said the planned high-speed submarine cable to Australia would provide faster connectivity for the local communities, but they should still think about whether the extra connectivity was “enough payback for them or whether other ways of monetising the data centre’s presence are needed too, such as special rates”.

Singaporean interest and the ‘AI factory’

An Overseas Investment Office decision showed the data centre was a joint development between BW Digital, a Singaporean company, and DG Founders General Partner which was ultimately majority owned by the Galasso Family Trust, with trustees French citizen Rémi Galasso and wife Mania Marion Mosafer-Galasso, a New Zealand citizen.

The Singaporean company owned Hawaiki, a 15,000km-long submarine cable linking Australia, New Zealand, Tonga, American Samoa, Hawaii and the West Coast of the United States.

The company’s new data centre would be connected to the Datagrid-owned Tasman Ring, a submarine cable with planned landing points in Auckland, Greymouth, Hobart (Tasmania), Invercargill at Ōreti Beach, Melbourne, New Plymouth and Sydney.

There were 56 operational data centres nationwide, with another 20 planned or under construction, according to a report by NZ Tech, Empowering Aotearoa New Zealand’s Digital Future, published in September.

It was part of a worldwide substantial growth of energy-intensive accelerated computing which is used mainly for AI purposes.

However, not many data centres took such a substantial proportion of energy from the national grid.

European data centres typically consumed about 45TWh per year, accounting for 1.6% of total European Union electricity consumption, while worldwide, data centres consumed about 415 TWh or 1.5% of the world’s total yearly electricity consumption, according to reports by the European Commission.

Datagrid chief executive Rémi Galasso said the Southland “AI factory” would mostly rely on renewable energy and could allow generators to expand capacity.

Unlike Tiwai Point, the centre was “specifically designed to modulate its load in response to grid conditions”, he said in an emailed statement from overseas.

Blocking AI infrastructures would mean ceding sovereignty to global competitors, he said.

The Frenchman claimed the planned data centre’s water consumption was comparable to a single mid-sized dairy farm.

But data centre consumption could quickly surge.

In Oregon, Google data centres increased their water use threefold between 2016 and 2021, from 113.1 million litres to 355.1 million litres, according to records from the City of Dalles, a town with a population of 16,000 where the 200-employee data centres were based.

Galasso said the planned data centre in Southland was not comparable to US facilities.

“We are also looking to develop a skilled local workforce pipeline in partnership with the Southern Institute of Technology and industry training organisations in Southland, a region that has actively been seeking economic diversification following the long-running uncertainty around Tiwai Point.”

After the construction phase, the data centre would be likely managed by a different company, like Amazon Web Services, Google or Microsoft.

“Hyperscale operators of the type we are targeting do manage infrastructure remotely as part of global networks, and that is standard industry practice worldwide.”