“Hyperscale Data Centre” In Southland
The OIO has approved Datagrid New Zealand Limited Partnership (Austria 38%, New Zealand 31%, France 31%) to buy six hectares of land located at 342 Flora Road East, Makarewa, Southland, from Michael Douglas Russell and Brittany Ellen Russell (New Zealand 100%). The price paid was withheld. “The Applicant was established for the purpose of developing New Zealand’s first hyperscale data centre park, Datagrid”.
“The Applicant is acquiring the land to support the operations of the data centre, which is being constructed on the adjoining property. The main benefit to New Zealand is that the Investment will enhance the viability of the Datagrid project. Consent was granted as the Applicant has met the investor test criterion and the investment is likely to benefit New Zealand”.
This is the latest Datagrid land acquisition approved by the OIO. In December 2021 it approved the purchase of “freehold interest in approximately 42.8167 hectares of sensitive land located at 370 Flora Road East/Taylors Road, Makarewa (the Land) for the establishment of a hyperscale data centre (the Datagrid)”. It paid $1.8 million for the land and quoted: “Over $1 billion for establishing the Datagrid”. The company was then owned (France 62.5%; Austria 37.5%).
That December 2021 Decision gave more information on the Datagrid. “The Applicant is a New Zealand limited partnership established for the purpose of the Investment. The Applicant is seeking to consent to acquire the Land and to establish the Datagrid, which is expected to be New Zealand’s first hyperscale data centre”.
“The construction of the Datagrid is likely to result in the introduction of over $1 billion additional investment into New Zealand. The Datagrid is expected to create job opportunities for New Zealanders, both during the construction phase of the Datagrid and the operational phase. The location for the investment in New Zealand has been selected as it is likely to mitigate the consumption of electricity due to its lower temperatures and can provide access to reliable, green electricity”.
“The investment is also subject to resource and building consents to construct the Datagrid. As the Applicant does not currently operate in New Zealand’s data centre market, this Investment is likely to increase market competition and will lead to greater efficiency for clients of the Datagrid due to its scale.
The OIO is satisfied that the regulations requiring farm land to be offered for acquisition on the open market have been complied with. The OIO is satisfied that the benefit to New Zealand test and the investor test has been met”.
So, what is this proposed Datagrid in Southland? To quote from the Data Center Construction Channel (23/7/24): “New Zealand data center firm Datagrid has acquired another six hectares of land to expand its campus on New Zealand’s South Island. The New Zealand Overseas Investment Office (NZ OIO) has approved the land acquisition in Makarewa, Invercargill. Datagrid founder Rémi Galasso said on LinkedIn the purchased will allow ‘the project to reach a total area of 49 hectares (121 acres)’”.
“Galasso said the extension will enable a ‘significant’ AI data center zone supported by up to 1GW of renewable energy; the construction of a new power substation; and a cable landing station for the upcoming Te Waipounamu subsea cable. Perrine Dhalluin, Datagrid CEO, said: ‘This is an important milestone for (the) Datagrid project and we are extremely pleased the OIO has approved our application”.
Fast Track
“Our next step is to obtain resource consent through our Fast Track consenting application currently being considered. This will enable us to get going as soon as possible with construction. The AI data center market is booming, and we believe Southland New Zealand is the best location in the Asia Pacific region to develop an AI training cluster”.
“She continued: ‘Extensive land, cool climate, green power, safe environment and diverse connectivity are key success factors in this market. Our objective is to secure 240MW in phase one and grow over time up to 1GW, which is why we needed to extend our land from 43 hectares to 49 hectares. This is now done’”.
“First announced in December 2020, Datagrid – founded by Galasso, then of Hawaiki Cable, alongside Callplus Ltd founder Malcolm Dick – aims to develop a large data center on New Zealand’s South Island.
The company previously planned to develop build up to ten 6,500 sqm modules totalling around 150MW of capacity. It acquired 43-hectares in Makarewa, a small town seven kms north of Invercargill, in early 2022 and filed a land use application later that year. The University of Otago is set to be an anchor tenant of the facility”.
Depends On Manapouri For Electricity
“Partnering with Meridian Energy, the facility will be the first hyperscale data center in the area. It will draw energy from the Manapouri hydropower scheme, which is due to have a large surplus once the Rio Tinto aluminium smelting facility at Tiwai Point closes. The plant was due to close in 2024, but signed a contract to keep the site running until 2044. BW Digital is a minority shareholder in Datagrid; it previously acquired Galasso’s Hawaiki cable venture”.
“Hawaiki Cable is a 15,000km telecommunication cable connecting 356 million consumers in Australia, New Zealand, American Samoa, Hawaii and the continental US while CallPlus was a telecommunications company providing phone, calling, Internet, mobile and advanced connectivity services to New Zealand businesses” (Otago Daily Times, 30/5/22) https://www.odt.co.nz/regions/southland/who-behind-data-centres-south It will be interesting to see what happens to this project now that the Manapouri power station will not be having “a large surplus”, due to our old mate, the Tiwai Point aluminium smelter, now not closing in 2024 (surprise!) but carrying on to at least 2044.
The full July 2024 Decisions are at
https://www.linz.govt.nz/our-work/overseas-investment-regulation/decisions
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