A Singapore-based company building a large artificial intelligence data centre north of Invercargill holds resource consents allowing it to draw more than 600,000 litres of groundwater a day, and a water engineer says an allowance that size deserves a harder look than it has had.
RNZ reported on Monday that Datagrid was granted 10 resource consents this year for its planned AI factory at Makarewa, about 9km from central Invercargill. The consents cover roughly 78,000 square metres of buildings and allow the site to take more than 600,000 litres of groundwater each day, along with the discharge of about 5,000 litres of treated wastewater. On an annual basis the water take works out at roughly 220 million litres.
Evan Vaughters, an engineer who chairs a climate change research group at Water New Zealand, told RNZ the consented volume was large for a single site, putting it at about the amount a town the size of Kaikōura would run on. His concern was less about whether the effects on the local aquifer had been modelled and more about what the water is being used for at all.
“For instance, they’ve been able to demonstrate they can mitigate the localised effects taking from this particular aquifer but the bigger question is, is this the best use of those finite water resources,” he said.
Vaughters also questioned whether the monitoring attached to the consents was strong enough to pick up problems over the decades the plant is expected to run. “Certainly it wouldn’t be a long walk off a short pier to say that there is a much wider resource allocation question here,” he told RNZ, adding that “we build and plan on the environment of the past and [we] need to be thinking about the environment of the future”.
Datagrid’s answer is that the consented figure and the expected figure are two very different numbers. Executive chairperson Rémi Galasso said the plant is designed around Southland’s climate rather than around water. “Invercargill’s cool temperatures allow it to rely entirely on free air cooling, no groundwater draw,” he said. The company told RNZ the small amount of water needed for occasional evaporative cooling assistance on warm days would come from rainwater harvesting rather than the aquifer.
That gap between what a consent permits and what an operator says it will actually do is a familiar feature of the resource consent system. Applicants commonly seek headroom so they are not forced back through a consenting process if conditions change, and councils grant the maximum they are satisfied can be managed. The practical effect is that the public number, the one that ends up in headlines, is usually the ceiling rather than the forecast. It also means the ceiling is what the company is legally entitled to take if its plans change, which is the point Vaughters is pressing.
The water question is only one part of a project that has become the largest single industrial proposal in the lower South Island in years. The Makarewa site covers 49 hectares and the campus is expected to open in 2028, with an initial capacity of 280 megawatts and a build-out running well into the 2030s. At that scale it would become the country’s second-largest single user of electricity, behind only the Tiwai Point aluminium smelter down the road at Bluff.
1News reported on Sunday that the development is valued at around US$3 billion and, once running, would account for roughly 6 percent of New Zealand’s total electricity supply. The same report noted New Zealand currently has 56 data centres with another 20 in the pipeline, and that the Crown agency Invest NZ has been marketing around $30 billion of AI-related investment opportunities offshore.
Those numbers are the reason the project attracts both enthusiasm and unease in roughly equal measure. Southland has spent the better part of two decades being told the smelter might close and taking the regional economy with it. A buyer that wants a very large, very steady block of electricity, and that is prepared to sign long-term supply deals to get it, is not an obvious thing to turn away. Datagrid has a 140 megawatt supply agreement with Mercury, and Contact Energy has proposed a wind farm at Slopedown Hill in eastern Southland, about 50km from Makarewa, that would feed up to 380 megawatts into the national grid.
The counter-argument is about who pays for the rest. Don Christie, a director of Wellington software company Catalyst, told 1News the effect on other users would be to “make renewable energy far more expensive”. Whether that holds depends on whether new generation gets built fast enough to cover the new load, which is not a question anyone can answer with certainty yet.
Tech NZ chief executive Graeme Muller framed it as an opportunity to be structured rather than a threat to be blocked, telling 1News the question was how to build a data centre that “underwrites our electricity system”. Large, predictable demand can make new generation projects bankable in a way that scattered household growth cannot.
Locally, the objection has been less about the technology than about the process. Campaigner Kelly Blomfield, who has been organising community meetings near the site, told 1News “we’re not anti-technology, we’re not anti-progress”, before adding “we’re just anti-no transparency”. Consents for a project of this scale are complex documents, and residents have found out the details in pieces, well after the decisions were made.
None of this stops the project. The consents are granted and the investment approvals are in place. What the past few days have done is put a specific, checkable number on the table, and invite a question the consent process itself does not really ask, which is whether a finite regional resource is going to its best use. Southland will get several years to work out its answer before the first racks are switched on.
What do you think, is a $3 billion AI data centre the right anchor tenant for Southland’s power and water, or is too much being committed too quickly? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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