Fears new data centre could bump up power bills

2026-03-16 - 16:07

It will be the country’s second-biggest user of electricity after the Tiwai Point aluminium smelter. A $3 billion data centre in Southland that, as the marketing says, “changes everything” ... “... delivering the most significant upgrade to New Zealand’s digital infrastructure in a generation. We’re doubling national data capacity and opening up a high-growth gateway to Asia-Pacific’s booming cloud and AI economy.” Multiple resource consents have been granted by three local authorities to get Datagrid’s huge AI data storage project in Makarewa off the ground, and to land a high-speed internet cable from Australia coming up at Oreti Beach near Invercargill. But where will all the power come from? The likely answer is the Manapōuri hydro-electric power plant, which also powers Tiwai. But if there’s a shortage, say in a drought, what will the data centre’s requirement for constant electricity do to the market – and our power bills? That’s what niggles Newsroom’s South Island editor, David Williams, who speaks to The Detail today after six years of keeping tabs on the project. Datagrid has told him it won’t be answering his questions until it issues a news release later on – possibly this week. For its international clients, the fact that the centre will be using clean energy is a big selling point, but is there enough of that energy to go around? “It’s not like a data centre can just power down,” says Williams. Three local authorities have granted multiple resource consents for the new data centre to be built in Southland. Photo: Screenshot from Datagrid’s YouTube “The advantage of Tiwai is that they can say, ‘Okay, well, we’re not going to put on this particular potline. We will close down for a while, and that’s part of our contract, and we’ll get paid by the country if you like, to shut down because that’s good for New Zealand Inc’. “Data centres need continuous power. If they power down ... that’s why they have these backup generators ... if they power down, it’s actually damaging to their units or their processing centre. It needs to be a constant supply.” Fast-track approval has just been given for a large Contact Energy wind farm just 50km away from the centre’s site, so that could be a piece of the puzzle. Williams says this is “not your usual Southland development, I would have thought”. “The scale of this is quite something.” Not only does it involve building six data halls, but it is also flanked by 12m-high noise control barriers over 9.5 hectares on a 48-ha property. There will be 84 emergency generators, each with a 10,000 litre diesel tank and a 15m high exhaust stack. The construction phase will offer the most lucrative economic return to the region, with up to 550 workers expected to be on site, but once it’s finished, it will only require about 50 staff to keep it going. The main transmission line practically runs over the top of the site, and Datagrid will build its own substation and upgrade the grid exit point. Williams says the company has done well to consult with neighbours, iwi, and anyone else affected, all of whom seem to be on board with the mitigations it’s planning. Southland Mayor Rob Scott has told him, “these people have done it right”. “They’ve talked to people, they’ve consulted the community, but more importantly, they’ve listened,” he says. “They’ve taken account of the things that they’ve said, and they’ve tried to change things.” Measures included noise mitigation from the 24-hour hum of servers and concerns answered over water, required in great quantities for cooling. “Most of the people who live around them have given their written approval for what’s going on,” he says. Williams says given the Amazon data centre debacle in Auckland, where billions of dollars’ worth of building and employment were promised but never eventuated, people are right to be sceptical. But he says this project has emerged differently, starting small and getting bigger. “But I do note,” he says, “with this particular project, the consent approval announcement was not made by the Prime Minister. So maybe that’s a good sign.” Check out how to listen to and follow The Detail here. You can also stay up-to-date by liking us on Facebook or following us on Twitter.