New Zealand's government has made a clear decision: the country wants to become a destination for AI datacentres. A recently launched agency called Invest New Zealand is actively pitching the country to global tech companies, targeting NZ$25 to 30 billion in foreign investment over five years to build datacentre campuses and supporting infrastructure.
The first approved project gives a clear preview of what that looks like on the ground. Datagrid, a company backed by Singaporean investors, received full resource consent in March 2026 for a 49-hectare campus in Makarewa, a small farming community near Invercargill at the bottom of New Zealand's South Island. The facility will consume 280 megawatts of electricity, making it the country's second-largest power user. It is powered by a dedicated grid connection and a 15-year, 140-megawatt deal with New Zealand energy company Mercury. Datagrid also plans to build a new undersea cable connecting Invercargill directly to Sydney and Melbourne.
The government's logic is straightforward. New Zealand has abundant hydropower, a cool climate that reduces the need for artificial cooling, political stability, and land. Boston Consulting Group, commissioned by Invest New Zealand, estimates the full programme could generate up to NZ$70 billion in economic activity over the next decade. Local officials in Invercargill have welcomed the Datagrid project, pointing to the 1,200 construction jobs and faster internet.
But the Makarewa community was not consulted during the approval process, only direct neighbours were. Residents say they learned more about the project from reading about datacentre controversies overseas than from the company itself. Datagrid has approval to draw up to 604,800 litres of groundwater per day, discharge treated wastewater, remove a nearby wetland, and operate up to 84 diesel backup generators during power outages. The company's CEO has previously said concerns about water use are unfounded given the region's cool climate, and that the project runs under long-term renewable energy arrangements. Datagrid did not respond to a request for comment on the community concerns.
The permanent jobs number deserves attention. Datagrid promises roughly 50 ongoing positions once the facility is complete. That ratio, approximately 1,200 during construction and 50 forever after, is consistent with what research across hundreds of datacentres in the United States has documented repeatedly. A typical 250,000-square-foot datacentre employs around 50 full-time workers once running, about half of whom are contractors. The construction jobs are real, but they end. The facility then runs largely on automation.
Invest New Zealand acknowledges this is a known pattern, arguing that a pipeline of multiple campuses would keep construction employment continuous, and that datacentres would help "socialise" transmission costs by contributing to grid infrastructure. A Spinoff report from a recent Invest New Zealand investor event noted that an Ipsos poll found only 35 percent of New Zealanders believe AI's societal benefits outweigh its environmental costs, against a 49 percent global average. The agency's report cited the Datagrid project as evidence of strong social acceptance in New Zealand, a claim that sits awkwardly against what residents in Makarewa are actually saying.
The global pattern here is well-established. Organised community opposition to datacentres has grown sharply. In the US alone, datacentre project cancellations quadrupled between 2024 and 2025, and at least 12 states have filed legislation to pause new construction permits. Ireland, which sends more of its national electricity to datacentres than any other country, now restricts new builds near Dublin due to fears of grid overload. A court in Chile halted a Google datacentre after locals discovered it would extract more than 7 billion litres of water annually.
New Zealand is entering this global race at precisely the moment communities elsewhere are starting to push back effectively. The economic case for hosting these facilities is not wrong, but it depends heavily on transparency, honest job accounting, and genuine community involvement before the cement is poured. What is happening in Makarewa right now is a test of whether New Zealand can do that better than the countries that came before it. The early signs are not encouraging.