Plans to build a NZ$3.5bn (US$2bn) AI datacentre in Makarewa, New Zealand, have sparked concerns among local residents about electricity and water consumption, noise pollution, and lack of transparency. The facility, proposed by Singapore-based Datagrid, will be the country's first AI datacentre and is set to become its second-largest electricity user after the Tiwai Point aluminium smelter, consuming 280MW of power.
Project Details and Local Approval
Datagrid has secured approval to build the datacentre on a 49-hectare site in Makarewa, north of Invercargill. Construction is expected to begin this year, with operations starting by 2028. The centre will be used for AI training, processing, and data storage, serving global AI and cloud providers. Datagrid also plans to build a high-speed internet cable between Invercargill and Australia. Local authorities have welcomed the project, citing job creation and improved internet speeds. The company claims about 1,200 jobs will be created during construction and 50 permanent positions upon completion.
Community and Expert Concerns
Angus Dowell, an economic geographer studying datacentre construction, highlighted "a lot of red flags" regarding the project and New Zealand's push to become an AI hub. He noted that datacentres provide short-term economic benefits but few long-term jobs, questioning the local economic gains. Kelly Blomfield, chair of the Southland Sustainable Resource coalition, expressed frustration over the lack of information: "Locals down here kind of feel like we've had our region sold out from underneath us." She added that attempts to gather details from Datagrid have been unsuccessful.
Environmental and Infrastructure Impacts
Residents are particularly worried about water use, noise, and light pollution. Environment Southland regional council reports show Datagrid has approval to discharge air contaminants from up to 84 diesel backup generators, draw up to 604,800 litres of groundwater per day, discharge 5,000 litres of treated wastewater daily, and remove a nearby wetland. Amanda, a Makarewa resident who wished to remain anonymous, said she was alarmed after learning more about similar projects overseas: "Now that I know a lot more from what I've seen overseas, I am alarmed … not just for Makarewa, but for New Zealand." She noted growing anti-datacentre sentiment in the community.
Government and Company Stance
The datacentre aligns with the New Zealand government's strategy to attract foreign investment for datacentres and AI infrastructure. Invest New Zealand aims to secure NZ$25-30bn in foreign investment, citing the country's renewable energy, available land, cool climate, and digital connectivity. A Boston Consulting Group report claims the industry could "unlock up to $70bn of economic activity" over the next decade. Datagrid CEO Rémi Galasso has dismissed concerns about water and power use, stating that Southland's cool climate reduces water needs and that the company will operate under long-term renewable energy arrangements. Invest New Zealand's CEO Robert Wall was not available for interview.
Call for Greater Transparency
Dowell emphasized the need for more information, saying, "It's fair for us to look at other places in the world and see the environmental impacts of datacentres, the highly asymmetrical distribution of value as part of the big tech AI economy, and say: we need to know more. We should demand more, because there's a lot at stake." Blomfield echoed this sentiment, stating that New Zealand has entered the race to become an AI datacentre hub "but no one asked us if we want to be in that race."
