Southland's first 'AI factory' data centre gets go-ahead

Datagrid New Zealand has secured full resource consent for a large data centre development in Southland that it describes as the country's first "AI factory", clearing a key regulatory hurdle ahead of construction.

Southland District Council, Environment Southland and Invercargill City Council have approved the data centre campus planned for Makarewa, near Invercargill, along with associated electricity infrastructure.

Separate approvals have also been granted for the landing of the Tasman Ring Network at Oreti Beach, which Datagrid says would be the first international subsea cable connection to New Zealand's South Island.

Southland site

The project centres on a 78,000 square metre facility in Makarewa, including a dedicated Grid Exit Point substation.

Once operating, the facility is expected to consume 280 MW of power, which would make it New Zealand's second-largest electricity user after the Tiwai Point aluminium smelter.

Large new electricity loads have become a focus for policymakers and grid planners. Data centres, electrified industry and population growth are increasing demand as New Zealand seeks to expand renewable generation and strengthen transmission and distribution networks.

Datagrid cited access to renewable electricity and a cooler climate as reasons for choosing Southland. It also pointed to New Zealand's political stability and geographic position as factors supporting international data processing and digital infrastructure.

Jobs and build

Datagrid expects the construction phase to create more than 1,200 skilled and technical jobs, delivering employment and wider economic benefits for the Southland region.

The consents clear the way for physical works to begin, although Datagrid has not provided a construction timetable or target date for operations. Further announcements are expected in the coming weeks as the project progresses.

Cable landing

The Tasman Ring Network cable is the second pillar of the plan. Datagrid describes it as a new submarine optical cable intended to bring high-capacity international connectivity to the South Island for the first time.

International connectivity remains a critical component of New Zealand's digital economy. Most existing subsea cables land in the North Island, with long-haul domestic backhaul carrying traffic to the rest of the country. A South Island landing would add geographic diversity and could reduce reliance on domestic routes for some traffic.

Datagrid says the Oreti Beach landing has been fully approved, but has not disclosed capacity specifications, build partners, or a service-ready timeline.

Company plans

Datagrid was founded in 2021 by Rémi Galasso and Malcolm Dick. It is developing what it calls the country's largest hyperscale computing project, with a 280 MW campus in Southland.

The facility is described as purpose-built for AI training, inference and high-performance computing, with high-density GPU clusters serving global AI and cloud providers.

The site is expected to connect to Transpower's transmission network via a dedicated 220 kV grid connection. Datagrid also said the Southland climate will support energy-efficient operations, alongside cooling technologies designed for high-density computing environments.

Resource consent is a major step for a project of this scale, particularly where it involves land use, environmental impacts, and electricity infrastructure. The approvals reduce planning uncertainty as Datagrid moves towards procurement, construction contracting and finalising grid arrangements.

Founder and CEO Rémi Galasso framed the decision as a regional milestone.

"We extend our sincere gratitude - ngā mihi nui - to the iwi, landowners, local councils, and the Southland community for their unwavering support throughout this process," Galasso said. "This approval is the result of years of dedication and collaboration, and we are excited about the transformative impact this project will have on Southland and New Zealand as a whole."

Datagrid expects further announcements in the coming weeks as the project advances.