Mar 23, 2026 | Posted by Abdul-Rahman Oladimeji
Datagrid New Zealand has signed a 15-year, 140MW Power Purchase Option Agreement (PPOA) with New Zealand energy company Mercury to supply power for its planned hyperscale AI campus in Southland.
Under the agreement, Mercury will supply roughly 1.2TWh of power annually, supporting the first phase of Datagrid’s planned 280MW “AI factory” data center.
Datagrid received approval earlier this month to build the campus on a 78,000 sqm (840,000 sq ft) site in Invercargill, South Island, with construction expected to begin in mid-2026. The project aims to reach 280MW by 2028, targeting a power usage effectiveness (PUE) below 1.1.
The company said the Mercury deal provides price certainty while attracting global AI and cloud workloads, leveraging the South Island’s fully renewable power and cooler climate to establish the site as a low-carbon compute hub.
Datagrid is also developing the Tasman Ring Network, a subsea cable system designed to enhance South Island connectivity and reduce dependence on North Island landing points. Announced in late 2024, the 6,000 km (3,728 mi) cable will link Auckland, New Plymouth, Greymouth, and Invercargill in New Zealand with Sydney and Melbourne in Australia. The system is expected to deliver 540 Tbps and come online in 2027.
“This 140MW agreement with Mercury is a cornerstone for Datagrid New Zealand. It enables us to offer international AI players a competitive platform powered by renewable energy, natural cooling advantages, and long-term stability in Southland,” said CEO Rémi Galasso. “In a world of increasing global uncertainty, we see New Zealand evolving into a secure and trusted hub for AI infrastructure.”
Mercury stated that the agreement will help fund additional generation capacity, with hyperscale demand serving as an anchor for new projects. The company is a leading renewable energy producer in New Zealand, operating nine river hydro stations, five geothermal plants, and multiple wind farms.
“It’s exciting to support New Zealand’s first AI Factory,” said Mercury CEO Stew Hamilton. “Data centers represent a NZD 70 billion ($40.6bn) economic growth opportunity for New Zealand… Having guaranteed customers buying a significant amount of generation means we can continue to invest significantly in new renewable generation.”
