Datagrid faces coalition of unconvinced about data centre’s impact and benefits

Tuesday, 21 July 2026

On the brink of a public meeting about Datagrid’s $3.5 billion AI factory in Southland, the company’s chief executive Remi Galasso is adamant the facility will be nowhere near as thirsty or energy-sapping as feared.

It has resource consent permission to draw 600,000 cubic metres of groundwater per day — but simply won’t, he insists.

So why was that huge figure in the consent?

The figure represented a legal “boilerplate’’, Galasso said — a reference to standardised, routine clauses which he said reflected legacy issues relevant to older plants that he said did not bear comparison to the next-generation facility planned for Makarewa.

“Resource consents are intentionally written to look at the maximum theoretical impact,’’ he said.

“Because technology moves so fast, the paperwork has to be flexible. However, because we are building a modern AI factory rather than a traditional data centre, our actual design allows us to operate with a much lighter footprint.’’

The project continued to face opposition even though Environment Southland had granted consents for the environmental requirements that it policed, including for groundwater usage.

A public meeting, which would be streamed online, was being held at the Invercargill Workingmen’s Club in Invercargill on Wednesday evening, called by the Southland Sustainable Resource Coalition.

Representative Kelly Blomfield said the concerns were not reflective of legacy issues or blanket opposition to data centres, but related to what was known, and even at this stage unknown, about the Makarewa project.

“Our aim is to present the information we have read, researched and compiled to the people at the heart of what we are doing — Southlanders,’’ she said.

“We all have a voice and we all deserve to be heard.’’

Whether or not Datagrid changed its designs and plans, the resource consents still stood.

‘’The onus is not on us to prove they will use the resources they are consented to use,’’ she said.

“Rather, [it’s] on them to prove that they won't.

‘’Why ask for resources you don't intend on using?’’

The consents included discharges to air from up to 84 diesel generators if there was a power shortage.

The councils’ strategy and regulation general manager Hayley Fitchett said the council’s role was to assess any application against Resource Management Act requirements and the relevant planning framework.

Consents could include a range of conditions or mitigations to ensure environmental sustainability and in this case the assessed effects were determined to be ”no more than minor’’, she said.

“Environment Southland welcomes efforts by consent holders to reduce environmental impacts where this can be achieved,’’ she said.

Chairperson of a climate change research group at Water New Zealand, engineer Evan Vaughters, told RNZ the sheer scale of water the consents allowed the data centre to use meant there could be long-term unforeseen consequences and the consents did not provide for the kind of monitoring needed to assess this.

Galasso said he wanted to clear up confusion.

“When people read legal planning documents detailing hundreds of thousands of cubic metres of waters, or rows of diesel backup generators, it’s entirely reasonable to ask: is this heavy, industrial footprint truly right for Southland?

“There is a vast structural difference between the absolute maximum environmental ‘envelope’ permitted on a legal resource consent, and the highly efficient, ultra-green reality of what we are building.

“There will be no groundwater draw.’’

The 9C to 10C average temperature around Invercargill allowed the plant to rely entirely on free air cooling except on warmer days when rainwater would be harvested to supply the small amount of water needed.

The decision to design the system for high-density racks, engineered to better handle power draws and heat outputs per square metre, was enabling the use of much less water.

“We were not sure about that a few months ago,’’ Galasso said.

The centre would be New Zealand’s second largest electricity consumer behind only the Tiwai smelter, consuming 280 megawatts of power by 2028.

But Galasso said it would not operate in the manner of traditional data centres which relied on large fields of diesel generators to stay online every second.

Because AI workloads could be safely paused during grid issues without losing data “we don’t need days of fossil-fuel backup”, he said.

State-of-the-art battery energy storage system would keep the need for physical generators to “a tiny handful of absolute emergency backups’’.

The system would also provide a “massive energy buffer’’ which Datagrid was working closely with Transpower to use to support voltage stability across the entire national grid, he said.

“It acts like a shock absorber, helping smooth out sudden drops or surges on the network and make electricity more reliable for everyday Kiwi homes.’’

As for where the power supply would come from, Galasso said generators wanted to build new wind and solar farms but needed large, stable customers to justify the massive investment.

By signing long-term power purchase agreements such as its recent 140MW electricity option contract with Mercury, Datagrid was giving energy developers the confidence to kick off hundreds of megawatts of stalled renewable projects.

“Over the next few years, more brand-new renewable energy will come on to the national grid because of our project, than our facility will actually take,’’ he said.

This extra supply would help lower wholesale power costs and strengthen energy independence for all New Zealand.

And its Tasman Ring subsea cable network, connecting Invercargill directly to Melbourne, would be the country’s first international internet connection to terminate completely outside Auckland.

“For the country, it brings much-needed back-up path resilience to our international connectivity,’’ Galasso said.

“For Southland, it places the region directly on the global technology map, opening up incredible opportunities for future digital growth right here at home.’’

This story was amended to correct that the consent for the groundwater draw cited 600,000 cubic metres a day, not annually.