‘Biggest thing to happen in Southland since Tiwai’: AI factory gets green light
Thursday, 12 March 2026
The imminent construction of New Zealand’s first AI factory near Invercargill will result in the city receiving the fastest internet connection in New Zealand, mayor Tom Campbell says.
He believed this would attract hi-tech businesses to the city and benefit the local economy.
Datagrid New Zealand this week announced it had received resource consent from Southland councils for its planned data centre at Makarewa, near Invercargill.
The project would include the construction of a 78,000m² state-of-the-art AI factory campus.
The facility was being purpose-built for artificial intelligence training, inference and high-performance computing.
It would host high-density GPU (graphics processing unit) clusters serving global AI and cloud providers, powered by a dedicated 220-kilovolt grid connection to Transpower’s transmission network.
The company said once the facility was operational it would have an estimated power demand of 280 megawatts, making Datagrid NZ the country’s second-largest electricity user after the aluminium smelter at Tiwai Point.
The construction phase was expected to create more than 1200 skilled and technical jobs, delivering economic benefit to the region, Datagrid NZ said.
The company said the natural cooling conditions in Southland offered substantial energy-efficiency advantages, and Invercargill was poised to emerge as a vital digital destination in the coming years.
In addition, the landing of the Tasman Ring Network at Oreti Beach had been fully approved, representing the first international subsea cable connection to New Zealand’s South Island.
“This infrastructure will enhance global connectivity and support the nation’s growing digital economy.”
Campbell said the Datagrid project was exciting and would open up possibilities for Invercargill, the “biggest one being the [trans-Tasman] subsea cable coming into Oreti Beach and joining up with Datagrid”.
That would make the internet connection in Invercargill the fastest in New Zealand, he said.
With super-fast internet speed being important to hi-tech companies, they would be attracted to Invercargill, he believed.
“It offers the possibility of new industries coming in, not necessarily large employers, but companies employing highly skilled people and paying good salaries.”
Campbell said he understood work on the estimated $4 billion project would begin in the middle of this year and take about three years to complete.
He said there was a misconception that data centres were huge water consumers, and the company would rely on Southland’s cool climate and roof-captured rain water for cooling.
Southland Business Chamber chief executive Sheree Carey said the project was designed to attract global tech giants which would position Southland as a premier AI data hub.
“This project’s been five years in the making; this is big. This is the biggest thing to happen to Southland since [the smelter at] Tiwai was built.”
The facility would reduce Southland’s reliance on the traditional rural sector, she said.
“AI is a trillion-dollar global market and it’s doubling in size every six months, so why wouldn’t we want to be part of that?”