As of this week, the national grid operator, Transpower, says it’s still in an investigative phase.
That’s no small detail, given phase one of the data centre would use a peak 280 megawatts, with plans to scale up to 1 gigawatt (1000MW)
For context, Rio Tinto’s aluminium smelter at Bluff requires 572MW of power, or around 13% of New Zealand’s national supply or the equivalent to powering around 680,000 homes.
Datagrid was first proposed by its Singapore backers in 2020, when it seemed that Rio Tinto was going to walk away from the smelter, leaving a huge amount of power going begging.
Transpower has made encouraging noises about the data centre build. It says 17 power projects, generating a total 3.4GW are in the delivery stage with another 14GW in application stages.
But assessing Datagrid’s “AI factory” and an associated new sub-station (which Datagrid will have to foot the bill for) is a complicated process, which has already been underway for a year, and has an open-ended timeline.
“This application is currently in the ‘investigation stage’ where we carry out steps such as assessing technical requirements, evaluating network impacts, and determining the feasibility and scope of the proposed grid connection,” Transpower grid development executive general manager Matt Webb told the Herald.
“Once these details are agreed upon, and Datagrid commits to a Transpower Works Agreement to design and build the grid connection, the indicative timeline is two years.”
On the retail side, Mercury has signed an option to supply Datagrid with 140MW over 15 years.
Mercury chief executive Stewart Hamilton told Tech Insider: “The PPOA [power purchase option agreement] reflects that the data centre is currently in the development stage and gives flexibility in advance of a final investment decision.”
2. Funding
By New Zealand standards, $5 billion is a big chunk of change to spend on a data centre.
That’s around five times what Microsoft spent on its giant data centre at Westgate in northwest Auckland.
So how’s the fundraising going?
“Still working on it,” Datagrid founder and executive Remi Galasso messaged Tech Insider earlier this week.
The former French telecommunications executive has favoured laconic updates.
Notably, he has defied the odds before, raising hundreds of millions for the 15,000km Hawaiki Cable that has linked New Zealand with Australia, the US and several Pacific islands since 2018 (in 2021, Hawaiki was sold to Singapore’s BW Group – which today owns 37.5% of Datagrid, with Galasso’s family trust holding 62.5%, according to an OIO application).
With help from fellow Hawaiki Cable directors Tex Edwards and Malcolm Dick, he succeeded where rich listers Rod Drury, Sam Morgan and Sir Stephen Tindall failed in their bid to raise capital for their Pacific Fibre project.
Another factor in Galasso’s favour: Nvidia and others have also made tens of billions in funding available to LLM makers and data centre builders under vendor financing (or what the more cynical call “circular financing”). But we could be coming to the tail end of that cycle.
3. An international cable
Invercargill is a modest market for artificial intelligence, which on the face of things would make Galasso’s capital-raising drive more challenging.
But that’s where the Tasman Ring Network comes in – a companion project that would see a fibre optic cable connect Bluff with Sydney, Melbourne and Hobart, with a connection from the Australian East Coast to Auckland then on to New Plymouth and Greymouth.
In Auckland, data centres are clustered in the northwest to be close to existing international cables and New Zealand’s main internet peering exchange.
Chorus COO Drew Davies and CEO Mark Aue with Datagrid CEO Perrine Dhalluin and founder Remi Galasso in December 2024 as the two companies signed an MoU for the Tasman Ring project. Chorus later walked away from the project, citing lower-than-anticipated demand from anchor customers. Photo / Chorus
“The cable is essential for the data centre,” a Ministry of Business, Innovation and Employment (MBIE) briefing published in June 2025 stated.
It would allow Datagrid to sell its capacity to the world.
“The Tasman Ring is expected to be operational in 2027 and have a capacity of 540 terabits per second, allowing for data-intensive operations associated with training [artificial intelligence or AI] large language models,” the MBIE briefing said.
Chorus signed an MoU to be cable partner for the 6000km Tasman Ring project, which seemed a good opportunity for the UFB fibre operator to diversify beyond its highly regulated domestic business.
But late last year, Chorus walked away from the Tasman Ring.
Chief executive Mark Aue told Tech Insider at the time that anticipated demand had not eventuated.
“Pre-sales commitment was not stacking up,” the Chorus boss said.
Another key factor: the limited number of cable-laying ships in the world were all busy and 2027 seemed too tight, Aue said.
“The timelines kept moving to the right. Realistically, I’d now say it’s post-2030,” Aue said.
The Tasman Ring Network will allow Datagrid to export its AI processing capacity. Image / Datagrid
Galasso says the cable project has now been shifted in-house.
Chorus livery has now disappeared from the cable project’s artwork, with it now being promoted as the Datagrid Tasman Ring.
A factory without many jobs
In its environmental consent application, Datagrid said its “AI factory” would support up to 5400 jobs during its construction phase and 72 fulltime jobs once operational.
It estimated the broader economic benefits would add $36m to New Zealand’s GDP per year.
If Galasso does get the project over the line, he will be doing better than Amazon, which abandoned construction on a giant data centre at Westgate after initial earthworks and Microsoft, which dallied too long after winning a time-limited, use-it-or-lose it OIO consent for a second Auckland data centre on a site at Whenuapai.
Both have favoured co-locating with existing data centre providers.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.