The Campaign Against Foreign Control of Aotearoa (CAFCA) is warning that a planned AI data centre in Southland would consume up to 25% of New Zealand’s annual electricity output and push power prices higher for Kiwi consumers and businesses.
CAFCA Organiser Murray Horton says data centres consume a phenomenal amount of electricity.
“The proposed $5 billion foreign-owned Datagrid AI centre near Invercargill would require 1 gigawatt of electricity to operate. That is nearly twice as much as the 570 megawatts that Rio Tinto’s Tiwai Point aluminium smelter consumes.
“Currently the smelter takes 13% of all the electricity New Zealand produces. If the data centre is built, we would have to sacrifice more than one third of the power we produce to supply just two foreign-owned businesses.”
Mr Horton says CAFCA has long targeted Rio Tinto’s smelter near Bluff, labelling it New Zealand’s biggest corporate bludger. It pays a secret, super cheap price for power that is not available for any other user. All other electricity users in Aotearoa therefore subsidise the power that the smelter consumes and exports in the form of aluminium.
“Rio Tinto’s smelter is the textbook example of corporate welfare in New Zealand, but this new data centre would take this to another level. It would use twice as much power and would require it 24 hours a day, every single day of the year.
“In a dry winter the smelter can turn off one or two of its pot lines to conserve power, but data centres cannot do that. Industry experts say AI computers can be damaged if they are shut down so they need an unending, uninterrupted supply.
“The Government’s plans to develop a liquefied natural gas import terminal in Taranaki to provide backup power in lean years have to be seen in this light. LNG is an environmentally harmful and, as we have seen with the war in Iran, potentially vulnerable solution to a problem largely created by these large power users.
“Without these major consumers, we could use new renewable energy generation and better storage and management of our supply to meet demand in dry years,” Mr Horton says.
Another problem with AI computing centres is that they generate high levels of heat, so they must be cooled using large amounts of water. This is why cool regions such as Southland are sought after by developers.
Heat from data centres can be siphoned off and used to heat urban areas, but this requires significant investment in infrastructure.
Mr Horton says concerns about electricity and water consumption as well as the insidious nature of AI are driving opposition to AI data centres around the world.
Because it has made a big bet on AI, the United States is at the forefront of this. Many states have used tax incentives to encourage data centres and some AI companies are even developing their own generators to power them. Microsoft plans to reopen the notorious Three Mile Island nuclear power plant to run data centres in four different states, for example.
“Now opposition to them is growing right in the US. The issue unites people across the political spectrum – from MAGA to the far left. And the New York Times reports there are movements against them in Europe, South Africa, Latin America, India and Southeast Asia.
“There are also concerns about the nature of AI itself. Many people are worried that AI will cause massive unemployment. The military’s use of AI and facial recognition tools create some truly frightening prospects.
“AI is unprecedented and potentially devastating technology but there is very little discussion of it in New Zealand.
“The Overseas Investment Office has approved the construction of the data centre in Southland, but that is not a surprise because they approve nearly all projects that foreign companies who want to operate here propose.”
Along with the ethical issues AI poses, the economics of data centres do not add up. While they create jobs during the construction phase, once they are up and running they are virtually automatic and profits flow to the biggest tech oligarchs in the world.
CAFCA is calling for a halt to major AI data centres in Aotearoa. They are being sold to the NZ public as The Next Big Thing, with little or no discussion about their massive impact on our electricity and water resources, let alone any discussion on the bigger issue of highly controversial AI. Nor is there any guarantee that they will actually be built in this country. Exhibit A: Amazon’s 2026 abandonment of its proposed hyper-scale data centre in Auckland. Amazon has opted instead to lease capacity in other data centres, rather than construct new builds. Aotearoa has more pressing needs for our electricity resources than turning them over to Big Tech for AI.
Organiser
CAFCA
Campaign Against Foreign Control of Aotearoa