At a glance
- Datagrid has bought four high-voltage transformers and other long-lead items through Transpower for a 360MVA substation at Makarewa, targeted for commissioning in late 2027.
- Transpower says the value of the agreement is commercially sensitive, and that Datagrid has paid that amount in full and up front.
- Datagrid says the substation will run four transformers with one held as a backup, so the site keeps full capacity if a unit goes offline.
- Datagrid founder and chief executive Rémi Galasso says earthworks start next month, ahead of a Series B round for the campus and a 2028 target for its first stage.
- Contact Energy and CDC Data Centres took the opposite route at Stratford, choosing a site beside a retired thermal plant whose grid connection is already built.
Datagrid has paid up front for the Makarewa connection equipment
Datagrid has bought the equipment that will connect its Southland campus to the national grid. The agreement with Transpower covers four high-voltage power transformers, their bushings and other long-lead items for a substation rated at 360MVA, tapping the existing 220kV lines that run from the Manapōuri power station to Tiwai Point. Transpower chief executive James Kilty put the target for commissioning at late 2027, with detailed design of the substation still under way.
Datagrid won consent for Makarewa in March, took Mercury's money in July and signed its cable contractors on 31 July, and the grid connection has sat at Transpower's investigative stage throughout. Who would carry the cost of that connection had not been published.
Transpower says Datagrid has paid the full amount up front, and that the agreement needs no further capital raising. A Transpower spokesman told NZ Herald technology editor Chris Keall that the value is commercially sensitive, and that "the amount has been fully paid upfront by the customer [Datagrid] and does not require additional capital raising". The purchase covers equipment. Transpower's process still runs through application, a works agreement and construction before power flows, and Datagrid founder and chief executive Rémi Galasso told the paper that earthworks begin next month while he raises a Series B round for a build the paper reports as budgeted at up to NZ$5 billion.
| Element | What is committed | Status |
|---|---|---|
| Connection equipment | Four transformers, bushings, long-lead items | Paid in full up front |
| Substation | 360MVA, one transformer held as backup | Detailed design under way, commissioning targeted late 2027 |
| Power supply | Mercury option over up to 140MW, 15 years | Option signed March 2026 |
| Developer equity | US$30 million for 12.7 per cent, Mercury | Completed July 2026 |
| Site works | Earthworks at Makarewa | Due to start next month, per Galasso |
| Campus | Initial 280MW stage, 2028 target | Series B round being raised |
| Subsea cable | Tasman Ring phase one, 2,300km, 2029 target | Contractors signed 31 July 2026 |
Source: Transpower and Datagrid statements, Mercury's July disclosure and NZ Herald reporting to 12 August 2026.
Elsewedy Electric builds four units against a late 2027 date
Datagrid placed the order now to get into the manufacturing queue. A person close to the deal told the Herald that "with electrification occurring at an accelerating pace around the globe, procurement of critical electrical equipment such as transformers has become highly competitive, often resulting in long lead times", and described pre-purchase agreements as "a standard process whereby a customer commits to securing this equipment in order to help minimise potential schedule pressures down the line".
"While detailed design for the substation is ongoing, procuring these transformers which are long-lead items helps Datagrid meet its planned timeline, which is targeting substation commissioning in late 2027," Kilty said.
Egypt's Elsewedy Electric builds all four units, which the Herald's trade sources say could cost more than US$10 million each. Datagrid says the substation will be built to an N-1 configuration, meaning one of the four transformers sits as a dedicated backup so the site holds full capacity if a unit is taken offline. Datagrid puts the connection at up to 360MVA of renewable electricity feeding a campus designed at 280MW for its initial stage, and Galasso told the Herald that could be expanded toward 1GW, with plans yet to be finalised and the outcome depending on how much capital the company raises.
Kilty says Transpower is managing large loads against available generation
"Transpower is carefully managing projects that require significant electricity such as Datagrid's to ensure that as they connect there is sufficient capacity on the grid to deliver the electricity and sufficient generation available to supply it," Kilty said.
Transpower's grid connection guidance allows 35 to 45 working days to assess a concept enquiry, puts a greenfield connection above 50MW at upward of NZ$20 million, and says a large, complex connection "may take longer than three years to commission". Transpower says the order of its generation projects sets the order in which it allocates resources. On load projects Transpower says it allocates resources "based on priority, not necessarily in the order requests are received".
Transpower was delivering 17 new generation projects adding 3,342MW alongside 18 load and customer projects as at 8 August 2026. Its head of customer and commercial, Timothy Duguid, took the closing energy panel at the Data Centre Leaders Summit in Auckland on 12 August, on where New Zealand's next 300MW comes from.
Luxon's compact asks builders to pay for transmission upgrades
Prime Minister Christopher Luxon rejected the Green Party's call for a one-year consenting pause in July and directed officials to draft investment principles instead, framed as a compact in which a builder contributes new generation, grid-stability investment and payment for transmission upgrades in proportion to the size of the project. Finance Minister Nicola Willis has since directed further work on measures to keep future data centres from lifting electricity prices, drawing on what Australia and other jurisdictions have done.
Datagrid paid for its connection equipment in full while those principles were still being drafted. The Herald's source describes pre-purchase agreements as standard practice, and the payment ran to Datagrid's construction schedule. New Zealand votes in twelve weeks, with the terms on which data centres connect to the grid among the questions in contention.
Mercury holds a 15-year option over up to 140MW of Datagrid's supply and paid US$30 million for 12.7 per cent of the company in July. The 140MW option covers about half the 280MW initial design, and conversion to a firm supply contract is a separate step.
Stratford starts with a grid connection already built
Contact Energy and CDC Data Centres said on 10 August they will seek consent for a 250MW campus at Stratford in Taranaki, near the site of the Taranaki Combined Cycle plant Contact retired this year at end of life. Contact says the operation of its existing 200MW of Stratford generation is not impacted by the proposal.
Contact's announcement calls Stratford "an attractive option for data centre development, with 500 MW of grid-scale batteries already consented and an existing grid connection", with "minor substation works required". Datagrid and Contact have taken opposite routes to the grid. Datagrid builds a 360MVA connection from scratch and orders its transformers more than a year ahead of commissioning, and Contact brings a connection a retired thermal station leaves behind.
Invest New Zealand has designated Twizel, Ōhau, Geraldine and Cromwell advantaged data centre zones, citing existing grid capacity, energy infrastructure and proximity to backhaul fibre, and markets them alongside the already consented Makarewa campus. The Electricity Authority has logged 12 further prospective projects with details confidential, against a national colocation market of about 208MW across 36 facilities. Any project among them that needs a new connection will order transformers from the same market.
The Herald reported that protesters targeted the Auckland summit and named Datagrid among the companies they oppose. Stop Data Centres NZ is calling for an immediate halt on new hyperscale data centres until enforceable protections are in place for public land, water, electricity supply and households, and a new Taranaki group formed this month. Datagrid's Makarewa consents were granted on a non-notified basis, which under the Resource Management Act means no public submissions were invited.
What to watch
The Series B. Galasso is raising against a build the Herald reports at up to NZ$5 billion, with earthworks starting next month and the connection equipment already paid for.
The works agreement. Transpower's process still runs through application, works agreement and construction, and the connection was at Transpower's investigative stage when last reported.
The cable's funding. Datagrid contracted ASN and OMS Group for phase one of the Tasman Ring Network on 31 July, running 2,300km to a landing at Torquay in Victoria with service targeted for 2029. The Herald reports the design as downsized, with funding committed so far to the marine survey.
The second order. The delivery dates quoted to the next New Zealand project that orders transformers will show how long the queue now runs.