Southland Community Raises Concerns Over $3.5B AI Data Centre

Southland AI Factory Proposal Sparks Face-to-Face Demands and Community Backlash

Opponents of a new $3.5 billion hyperscale artificial intelligence factory in Southland are calling on developers Datagrid to meet face to face, following a packed public meeting in Invercargill. Hundreds of residents gathered at the Invercargill Workingmen’s Club to voice urgent concerns regarding power supplies, noise pollution, and community consultation over the 78,000-square-metre data centre slated for Makarewa, according to event organizers.

Community Concerns Over Power and Consultation

The overflowing crowd at the Invercargill Workingmen’s Club highlighted deep local anxiety surrounding the massive infrastructure project, which is expected to open in 2028 alongside a high-fibre cable linking Invercargill to Australia called the Tasman Ring Network. Kelly Blomfield, organizer from the Southland Sustainable Resource Coalition, expressed surprise at the turnout. “As we come across more information, we’re going to have more evenings like this and opportunities for people to have their say,” Blomfield told 1News, adding that Datagrid’s absence from the meeting was a missed opportunity.

While Datagrid stated that construction will create 1,200 jobs, the facility will require only 80 permanent staff once fully operational. Critics remain skeptical about the economic and resource trade-offs. Simplicity managing director Sam Stubbs told 1News that data centres typically “employ very few people, they pay very low taxes, they’re masters at paying the lowest possible taxes but they consume a huge amount of power and the last thing New Zealanders need right now is higher power bills.”

Datagrid and Mercury Address Resource Impacts

In response to public scrutiny, Datagrid maintained that it secured all required approvals before consent was granted. Addressing specific environmental worries, the company stated that the facility will use zero groundwater. According to Datagrid, Southland’s naturally crisp 9-10°C average annual temperature allows the data centre to rely entirely on free cooling from ambient outside air.

On the critical issue of electricity capacity, Datagrid asserted that the project will not burden the national grid. “The project actively unlocks new, cheap renewable energy,” the company said in a statement. “This influx of clean energy increases total national supply, supporting lower long-term wholesale power costs for everyday Kiwis.” Bolstering this financial arrangement, Mercury announced it purchased a 12% stake in Datagrid for $53 million, building on a 140MW long-term power purchase agreement signed between Datagrid and Mercury in March.

Regulatory Pressures and Local Governance

Southland Mayor Rob Scott noted that the facility’s proposal strictly followed the established Resource Management Act process. However, Scott acknowledged that modern technological developments are outpacing traditional regulatory frameworks. “The technology at the moment with AI and everything else is moving in a pace that the world can’t actually keep up with,” Scott told 1News. “And I think we’re getting a consequence of that now. So we’re all trying to work within the rules and the regulations that we’ve got, and sometimes, they need to be challenged.”

Frequently Asked Questions

When is the Datagrid AI factory expected to open?

The facility is scheduled to open in 2028.

How many permanent jobs will the data centre create?

According to Datagrid, the centre will create 1,200 jobs during construction, but only 80 staff members will be needed once the facility is fully operational.

Will the data centre draw local groundwater for cooling?

What energy agreements support the project?

Datagrid and Mercury signed a 140MW long-term power purchase agreement in March, and Mercury subsequently purchased a 12% stake in Datagrid for $53 million.