gaining<\/a> key wastewater, groundwater, wetland removal and data cable landing consents from Environment Southland, there was still no news on a new Tasman Ring partner (Galasso did not return requests for comment).<\/p>\nLandscape shifts for Meridian<\/p>\n
Two other big pieces of the puzzle are also missing. <\/p>\n
Datagrid\u2019s original 2020 launch announcement said it was partnering with Meridian to build a 70 mega-watt (MW) data centre.<\/p>\n
But four years later, Meridian said in its annual results presentation that it was no longer an active partner in the project.<\/p>\n
After protracted talks, Rio Tinto announced in May 2024 that it had reached an agreement with Meridian (which would remain its primary provider) plus Contact and Mercury running through until 2044.<\/p>\n
![\"An]()
An image from Datagrid’s environmental consent application, with a new substation at right (which Transpower says Datagrid would have to fund, if it’s ultimately approved.<\/p>\n
The 572MW used by the smelter was no longer going begging as Datagrid lines up what is now a 280MW data centre, which will grow in time to a 1-giga-watt (GW) (1000MW) facility. The size of a data centre is described by its peak power use.<\/p>\n
Mercury\u2019s Manap\u014duri Power Station \u2013 built over an eight-year period, especially for the smelter \u2013 has 854MW capacity, or 800MW with resource consent limits (13% of New Zealand\u2019s total).<\/p>\n
Transpower: Lots of capacity coming online<\/p>\n
Earlier this week, Transpower said it was confident the national grid could meet the energy needs of the new data centre.<\/p>\n
Executive general manager of grid development Matt Webb said while the centre required a big load, there was a lot of new electricity generation emerging and Transpower was responsible for facilitating a balance between the two.<\/p>\n
Webb said there were a number of significant Southland wind projects going through the consenting process, along with solar projects.<\/p>\n
Transpower expected 1300MW of new projects (generation and battery storage systems) to be commissioned in 2026, increasing capacity by around 13% nationwide.<\/p>\n
Mercury chief executive Stewart Hamilton told the Herald his company\u2019s new wind farm in Southland \u201cwill provide some of that power\u201d.<\/p>\n
Kaiwera Downs will have around 180MW capacity once its second stage goes live. \u201cBut the wind only blows about 40% of the time, which brings that down.\u201d<\/p>\n
\u2018No commercial deal in place\u2019<\/p>\n
But while new capacity is coming to Southland, indications are that Datagrid is some distance from securing deals with any of the gentailers \u2013 which, beyond the commercial element, could well have a political dimension, given its data centre, if ultimately built, would become the country\u2019s second-largest consumer of electricity in a market where consumers are squealing about rising prices.<\/p>\n
In the US, planned new data centres often now face community protests.<\/p>\n
Meridian general manager Guy Waipara said: \u201cWe\u2019ve had a long-standing relationship with Remi and Datagrid, and we\u2019re pleased to see that they have received consent. We are always open to discussions with potential customers, but we don\u2019t have a commercial agreement in place.\u201d<\/p>\n
Contact said it had no deal. Genesis declined to comment.<\/p>\n
\u201cThere\u2019s definitely a component of chicken-and-the-egg,\u201d Mercury\u2019s Hamilton said.<\/p>\n
Two-year process<\/p>\n
On top of a deal with a gentailer, it will also be an involved process for a project of Datagrid\u2019s size to plug into the national grid.<\/p>\n
Webb said Transpower had been in serious discussions with Datagrid for a year or more and a formal connection application process was now underway.<\/p>\n
\u201cThis application is currently in the \u2018investigation stage\u2019, where we carry out steps such as assessing technical requirements, evaluating network impacts and determining the feasibility and scope of the proposed grid connection,\u201d he said.<\/p>\n
\u201cOnce these details are agreed upon, and Datagrid commits to a Transpower Works Agreement to design and build the grid connection, the indicative timeline [for the new connection] is two years.\u201d<\/p>\n
The grid connection will be a new 220-kilovolt (kV) substation. Webb said Datagrid would have to carry the upfront and ongoing costs, which have yet to be determined at the current investigative stage.<\/p>\n
The substation discussions revolve around a 280MW facility, Webb said, rather than Datagrid\u2019s ultimate goal of a 1GW plant.<\/p>\n
Funding for the data centre build<\/p>\n
Datagrid did not respond to questions about whether it had secured funding for its US$3.5b data centre.<\/p>\n
In December 2021, the company secured Overseas Investment Office (OIO) approval to buy 42ha of rural land in Makarewa, about 15 minutes\u2019 drive north of Invercargill, for $1.8m for a \u201chyperscale data centre\u201d that would most likely cost \u201cmore than $1b\u201d.<\/p>\n
The proposed facility has now been re-christened an \u201cAI factory\u201d to keep up with the temper of the times, but is still essentially the same thing: a campus of buildings housing tens of thousands of computer servers. The consent documents describe a 78,000sq m facility.<\/p>\n
The application said the Galasso Family Trust was the ultimate beneficial owner of 62.5% of applicant Datagrid New Zealand.<\/p>\n
BW Digital, an affiliate of BW Group \u2013 the Singapore company that bought the Hawaiki Cable for a reported US$350m in July 2021 \u2013 owned the other 37.5%.<\/p>\n
But a November 2025 OIO update said BW\u2019s stake had been sold to a firm associated with Galasso\u2019s family trust.<\/p>\n
Defied the odds before<\/p>\n
Raising $5.1b for the project is a tall order, especially given that major AI players have already set up shop in northwest Auckland, where Microsoft has spent around $1b on its first hyperscale data centre, with a second in the works, and Amazon and Google have entered major co-location deals with unnamed parties \u2013 widely assumed to be DCI and the part Infratil-owned CDC (which now boasts close to 220MW capacity over three Auckland sites).<\/p>\n
But Galasso has done it before, if not on this scale. The former telco executive raised hundreds of millions for the Hawaiki Cable (a project that Dick and 2degrees founder Tex Edwards joined as directors during the final push).<\/p>\n
And there are now new avenues since the Hawaiki days. Chip-maker Nvidia \u2013 whose GPUs (graphics processing units) now form easily the most expensive component of the computer servers that run \u201cAI factories\u201d \u2013 has extended around US$125b in vendor financing to various data-makers since 2024, albeit largely to established players.<\/p>\n
In terms of more traditional lending, the Financial Times reports that lenders looking to fund the build-out of data centres are being put off by a lack of sufficient insurance cover.<\/p>\n
Large investors including KKR and Blackstone are among lenders to have turned down data centre debt because of insufficient insurance, the FT says. The key reason is the rapid escalation in the size and cost of mega-scale data centres, plus the rising costs of covering power or water disruptions. <\/p>\n
It says one of the one of the largest data centre projects to date, Meta\u2019s US$30b Hyperion campus in rural Louisiana, secured about US$4b of coverage.<\/p>\n
A factory without many jobs<\/p>\n
In its environmental concent application, Datagrid said is \u201cAI factory\u201d would support 72 full-time jobs once operational (and close to 5400 during its construction phase).<\/p>\n
It estimated the broader economic benefits would add $36m to New Zealand\u2019s GDP per year.<\/p>\n
Chris Keall is an Auckland-based member of the Herald\u2019s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.<\/p>\n","protected":false},"excerpt":{"rendered":"Chorus\u2019 decision to withdraw from its partnership with Datagrid shines a light on the challenges faced by the…\n","protected":false},"author":2,"featured_media":334874,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[179527,179530,365,363,364,3269,3290,1550,44976,3105,179529,179526,72855,84518,9881,13741,179528,15028,19136,661,117,111,139,69,2170,29056,12062,15488,106438,145,223,1529,61,73915,2963],"class_list":["post-334873","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-51b","tag-78000sq","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-build","tag-cable","tag-centre","tag-consents","tag-data","tag-datagrid","tag-datagrids","tag-drainage","tag-earthworks","tag-facing","tag-factory","tag-hurdles","tag-landing","tag-largest","tag-major","tag-new","tag-new-zealand","tag-newzealand","tag-nz","tag-plan","tag-proposed","tag-removal","tag-southland","tag-stormwater","tag-technology","tag-the","tag-three","tag-to","tag-wetland","tag-zealands"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/334873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=334873"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/334873\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/334874"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=334873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=334873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=334873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}