McQuoid said: “We might move across the road and ruffle a few feathers later.”
On his group’s Facebook page, he stressed that protests should be peaceful.
“We’re really concerned with what these things [data centres] will do to the land, what they’ll do to the air and obviously power and water,” McQuoid told the Herald.
In the US, where data centres have been blamed for rising utility bills and noise pollution, the state of New York recently placed a one-year moratorium on the construction of new “hyperscale” facilities (data centres that consume more than 50 megawatts of power).
The move followed various cities and counties across a mix of “red” and “blue” states introducing similar bans.
McQuoid’s group would like NZ to follow suit.
‘I don’t see any pros’ – academic
In comments to the Herald immediately before the protest, Alex Sims, a Commercial Law Professor and technology specialist with Auckland University, said: “I don’t see any pros about hyperscale data centres being built in New Zealand”.
Sims said multinational data centre owners sent profits offshore.
“Tech companies are experts at minimising the tax they pay in high-tax countries such as New Zealand,” she said.
“Just look at the low taxes that Meta, Google and Amazon pay in New Zealand, despite earning large revenues here. For example, Amazon paid only $4.9m tax on the $480m in New Zealand revenues, with $353m sent overseas in ‘cloud fees’.”
Sims was quoting numbers for Amazon Web Services NZ. Amazon also has a second NZ subsidiary, Amazon Data Services, set up for its local data centre operation, which reported a $37.5m loss last year after taking a $45m impairment on its abandoned Auckland data centre build.
“Given the issues with noise and vibrations, data centres should not be built within 4km of any housing,” Simms added.
“And as part of that, data centres should be required to buy the land within 4km of the edges of the data centres.
“Also, it’s not a case of not being able to use AI. There are many types of AI, some require a lot of computing power and use of electricity and others do not.”
“You must have public consultation and if the public in the area do not want it, then it should not be forced upon them.
“Given that the hyperscale data centres will affect the whole of New Zealand, the public needs to have its say. There needs to be a binding referendum on the issue. I know referendums are not binding in New Zealand, but all the political parties can agree to abide by the results.”
Event speaker recognises concerns
Notwithstanding its billing, the event at the Cordis didn’t feature leadership from any of the big US firms who are driving the global data centre boom.
The speaker lineup did include Technology Users Association of NZ chief executive Craig Young, who told the Herald his group took a neutral view.
“Like any technological advance, data centres can be good if done the right way.
“We see there being significant upside to having data centres operating in NZ from the perspective of sovereignty of our country’s data, as well as providing a service to offshore customers.
“We recognise the concern over the use of electricity in particular and really want providers and the electricity sector to be innovative on how we can and should increase our ability to electrify our economy in a sustainable and cost-effective way.”
Noise
The “AI factory” that Datagrid plans for Southland has been a flashpoint.
Datagrid founder and executive chairman Remi Galasso recently told the Herald his company had listened to community feedback and acted on fears about noise.
“We have been actively engaged with the Southland community for more than four years. This includes close collaboration with Southland District Council, Invercargill City Council, Environment Southland, the Southland Business Chamber, Great South, the four local rūnanga, Ngāi Tahu, and Te Ao Marama Inc,” he said.
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“We have secured written support from all directly affected neighbours following extensive consultation, during which we listened to their concerns and modified our design accordingly.
“Additional mitigation measures include a 6m-high bund around the site to minimise visual and noise impacts, as well as the acquisition of an extra 10ha to construct a new dedicated access road directly on to Highway 98 – completely avoiding Flora Rd and the nearby primary school.”
In 2022, after gaining Overseas Investment Office (OIO) consent, Datagrid bought a 43ha site at 370 Flora Rd East, Makarewa, about 15 minutes north of Invercargill. In 2024, it added the adjacent 342 Flora Rd in 2024.
Water
Datagrid has been consented to take up to 220 million litres of groundwater each year to cool the servers within its six data halls.
But Galasso maintains Datagrid’s 280MW facility (with plans to upgrade to 1GW – or more than twice the power consumed by the Tiwai Pt smelter) will only need to use a fraction of that allocation.
“The actual water consumption will be very low, much smaller than, say, a dairy farm,” Hamilton said.
A 1000-cow dairy farm could use up to 20 million litres per year. How will Datagrid stay below that?
“Many data centres evaporate millions of litres a year to stay cool on hot days,” Galasso said.
“One of the reasons we chose Southland is that we don’t have to. The cool climate here means our systems can be held at temperature through heat exchange with the ambient air – no evaporative cooling, and cooling fans turning over at low speeds.
“And the liquid that does the cooling runs in a closed loop. It never meets Southland’s waterways, aquifers or soil, so there is nothing for it to contaminate.
“The criticisms circulating about our project are largely unfounded and appear to stem from incomplete or incorrect information.”
Microsoft and CDC have both said that their Auckland data centres used a mix of air cooling and closed-loop water cooling (or one lot of water recirculated) rather than the water-intensive evaporative cooling that has caused controversy in the US and elsewhere overseas.
Power
Earlier this week, CDC and Contact said they had partnered to explore the possibility of a 250MW data centre in Stratford, Taranaki.
Contact CEO Mike Fuge was asked on Ryan Bridge TODAY: “Energy-wise, will it wash its own face?”
“Yes. Absolutely,” Fuge said. “And it will be water-neutral.”
“That data centre in Stratford has a renewable energy project around it in the solar farm. It’s connected to new renewable projects in Taupō, in Taihape and in Southland.”
The Big Tech firms say they have already been bankrolling renewable power.
In 2023, Amazon – which says it will spend $7.5b over 15 years on building up its local data centre capability, even though progress so far has been often mysterious – signed a deal with Mercury to buy 50% of the electricity generated from its 222MW Turitea South wind farm, which was opened two years later, while a 10-year contract with Microsoft supported Contact Energy’s investment decision to construct the Te Huka 3 geothermal power station.
Sharp Albo?
Australian Prime Minister Anthony Albanese recently created an Office of AI within the Office of the Prime Minister and Cabinet, and said there would be new rules around data centres, including that they must pay for the construction of their own power.
On the carrot side, the Aussie PM promised fast-track approval for new data centres that met the new criteria.
New Zealand Prime Minister Christopher Luxon said he had met Albanese shortly after his announcement and New Zealand would follow a similar approach.
New data centres would need to underwrite new renewable power generation rather than draw from the existing grid, Luxon said. Guidelines were pending.
“What Australia is proposing is better than nothing,” Sims said.
She noted that at this stage, Albanese’s ideas were just proposals, yet to be legislated.
“I don’t think anything should be fast-tracked,” Sims said.
“Plus, you must have public consultation and if the public in the area do not want it, then it should not be forced upon them.”
Jobs
In an Overseas Investment Office (OIO) application, Microsoft said a new data centre in West Auckland would create “300 temporary FTE [fulltime-equivalent] jobs during construction… and 50 new FTE jobs once the data centre is operational”.
Contact and CDC say its data centre would create a peak 600 jobs during construction.
In a regulatory filing, Datagrid said construction of its hyperscale data centre would create 1200 jobs, with the facility requiring a staff of 75 once up-and-running.
But Galasso recently told the Herald that was lowballing it.
“Two hundred to 300 jobs is a good estimate” after the data centre is built, he said.
Local control
Crown agency Invest New Zealand recently embarked on a push to attract $25 to $30 billion in offshore investment in data centres and associated infrastructure over five years – which it says would generate between $70b and $160b in new economic activity.
The drive drew criticism from Don Christie, the managing director of Wellington-based IT and cloud services firm Catalyst, and co-founder of now-defunct ginger group NZRise.
“There are no knowledge economy jobs coming our way just by building giant refrigerators here,” Christie said.
The hyperscalers shifted revenue and profit offshore, minimising the local tax they paid, he added.
He was also dubious that new renewable power would accommodate new data centres. The reality in Europe had been a spike in gas and coal use, he said.
Christie added: “If we build data centres for New Zealand, on a New Zealand scale, which is what T4 Group and Datacom and others have been doing, that’s a completely different thing.”
Locally-owned Datacom and small data centre operator Datacentre220 both had representatives at today’s conference.
Earlier this month, Datacom group chief executive Greg Davidson said he was pro data centre expansion and foreign investment, but with the Government taking a more active interest in local versus international control.
“The Government has a view as to where ownership of big pieces of industry like power generation, airports, financial services and should sit, and how much of it should be on the New Zealand stock market or New Zealand-owned versus watching profits disappear offshore.
“The data centre economy should be a big piece of that equation. Ensuring that New Zealand benefits, and that taxes are paid here.”
Stop Data Centres NZ’s McQuoid said he wasn’t against AI. He used AI. He was broadly in sympatico with Christie’s take on “New Zealand scale” server farms.
“Smaller data centres control their water and power. A small data centre is a good thing. We all need them [data centres] but not to the extent they’re coming to New Zealand.”
NZ’s small, stalled data centre market
While the protesters fear an explosion of data centre construction, some tech investors and industry boosters have seen a stall.
After a flurry of data centre building in the early 2000s by Microsoft, CDC (half-owned by NZX-listed Infratil) and DCI (owned by Canada’s Brookfield), among others, recent projects have fallen by the wayside or seem forever on the runway.
A Fitch survey released in July said data centres operational in New Zealand currently consume a total 172MW (around 0.6% of our capacity), with 80MW under construction.
The “AI factory” that Singapore-based Datagrid plans for Southland has gained a series of environmental consents and $53m from Mercury to begin earthworks, but has yet to raise the billions required for the bulk of its build.
The company recently contracted for an international cable to export its AI compute power, but in a much-downsized design that has yet to be funded.
Datagrid’s initial design is for a 280MW facility, which could rise to 1GW (1000MW). Galasso says the design and power consumption has yet to be finalised. It will depend on how much capital he manages to raise for a facility that could cost up to $5b.
Contact and CDC’s 250MW Taranaki data centre is at the whiteboard stage.
Spark won consent to build a data centre at a surf park planned for Dairy Flat north of Auckland in June 2024, but construction has yet to begin.
The telco had difficulty raising the $1b required for its data centre expansion plans. In January Spark sold 75% of its data centre business to Australia’s Private Equity Partners, with the pair forming a joint venture called TenPeaks Data Centres – which has yet to reveal a timeline for its 130MW expansion plans.
Amazon took the aforementioned $45m charge when it abandoned its build on a giant site in Auckland’s northwest last year, though it says it made substantial investments “co-locating” or leasing space with existing providers and moving in its own gear.
Microsoft has also pulled back. Although a large data centre was built on land it bought at Westgate (immediately adjacent to Amazon’s plot), Microsoft’s Overseas Investment Office permission for a data centre at a second site at nearby Whenuapai timed-out as it failed to meet a use-it-or-lose it deadline.
The tech giant declined to answer questions about its decision.
It could become increasingly hard for new builds here to gain public support if New Zealand follows the trend of growing community opposition in the US.
Sims pointed to a May Gallup poll that found seven in 10 Americans oppose local construction of AI data centres.
The study found a majority would rather live next to a nuclear power plant.
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.
