At a glance
- Mercury chief executive Stew Hamilton told analysts on 18 August 2026 that two data centre projects "will probably consume our ability to build power stations over the next 5-10 years".
- Mercury's 15-year option to supply Datagrid covers about 1.2 terawatt hours a year, more than the 1.1 terawatt hours its three newest power stations will add.
- Hamilton put the first phase of Datagrid's Southland campus at 300 to 360 megawatts. Its planning approval covers 280 megawatts, and Mercury's option covers 140.
- New Zealand added 368 megawatts of renewable generating capacity through 2025, on figures MBIE published on 20 August 2026.
- Contact chief executive Mike Fuge told his results call on 10 August 2026 that "this is not a build it and they will come strategy".
Mercury's Datagrid option runs to 1.2 terawatt hours a year
Datagrid and Contact Energy have each proposed data centre campuses of 250 megawatts or more in New Zealand. On 18 August 2026 Mercury chief executive Stew Hamilton told analysts how much of that demand his company can supply. Mercury's results material puts a figure on it.
Mercury's option to supply Datagrid covers about 1.2 terawatt hours a year, on the figure the two companies announced in March 2026. The three renewable projects Mercury told the market it will have fully operational by the end of December 2026, at a combined cost of about NZ$1 billion, will add 1.1 terawatt hours a year between them.
UBS analyst Vignesh Nair asked how large the data centre market could be by 2030. Hamilton said he had spoken to hyperscalers, AI companies and developers, and that "there is an insatiable appetite for compute demand. I do not think that there is a limiting factor, especially with the couple of projects that have been announced so far. I think you will find that most limiting factor will be our ability to build new power stations at a rate that support that."
He named both live projects. "While we welcome the announcement around Stratford, as much as we do DataGrid, we think they both have a big role to play in it. There might be some others, but I think you will probably find that, with those two, maybe another one big data center, that will probably consume our ability to build power stations over the next 5-10 years, I would think."
BusinessDesk reported the build rate remark after the call. Mercury has published no transcript and its webcast recording was marked as coming soon on the results page on 20 August 2026, so these quotations come from the transcript published by Investing.com.
300 to 360, 280, 140 and 120 megawatts at Makarewa
Macquarie analyst Stephen Hudson pressed Hamilton on the size of the campus Mercury has optioned power to. Datagrid is the developer building at Makarewa, north of Invercargill. "First phase is at 300 to 360 megawatts. That's what we've been focused on for the moment, and so we're providing the 140 megawatts as part of that."
| What the figure describes | Megawatts | Source and date |
|---|---|---|
| First phase, per Hamilton | 300 to 360 | Mercury analyst call, 18 August 2026 |
| Approved campus design | 280 | Planning approval granted March 2026 |
| Mercury's supply option | 140 | 15-year option to supply, March 2026 |
| Datagrid load in Transpower's medium demand scenario | 120 | Security of supply assessment, 29 June 2026, from winter 2029 |
Source: Mercury and Datagrid disclosures, Transpower's 2026 security of supply assessment, and the analyst call transcript published by Investing.com.
Only one of those four figures is a contract: the 140 megawatts Mercury has optioned for 15 years. Transpower's assessment says that "for our Medium demand scenario, we have included 120MW increase in load for DataGrid ahead by Winter 2029", and its demand forecast includes announced load at Fonterra, NZ Steel, the New Zealand Aluminium Smelter and Datagrid.
Datagrid has separately ordered substation equipment for a 360MVA connection. That is a different measurement from Hamilton's 360 megawatts: MVA sizes the connection the network builds, megawatts the power reaching the servers, and the two cannot be compared.
A load factor is the share of the year a site draws its full power. Transpower's modelling gives data centres a 2035 load factor of 42, 58 or 70 per cent depending on scenario. Running 140 megawatts every hour of a year produces 1.23 terawatt hours, so the volume Mercury has optioned assumes a flatter profile than any of the three.
MBIE's Energy in New Zealand 2026, published on 20 August 2026, recorded renewable generating capacity of 9,149 megawatts in 2025, up 368 megawatts on 2024. Energy Minister Simeon Brown said on 9 August 2026 that data centres take about 0.6 per cent of consumption and are "projected to grow to about 3% by 2030".
Fuge sets three conditions for Stratford
Contact reported on 10 August 2026 and set different conditions. Chief executive Mike Fuge told his results call: "This is not a build it and they will come strategy. We've talked about the 3 terawatt hours of new demand sources that are known and committed across dairy, metals, data centers, and residential." Beyond those, he said, "we can see up to an additional 8 terawatt hours of live potential across the same 3 sectors."
Contact's development pipeline runs to 11 terawatt hours, of which it calls "over 4" priority. Jarden analyst Grant Swanepoel put it to Fuge that the company has 1.2 terawatt hours in a wind project against about 400 gigawatt hours of contracted load.
"We will stick to our word," Fuge said.
Contact and CDC said on 10 August 2026 that they will seek planning approval for 250 megawatts of computing load at Stratford in Taranaki, near the site of the combined cycle plant Contact retired in 2026, with about 350 megawatts of total load at peak. Contact is prepared to own up to half of it. Contact's 200 megawatts of peaking generation at Stratford is not affected by the proposal. Fuge listed three conditions: "We have to get a resource consent. We have to get a customer. We have to complete the concept and detail design."
Four and a half years from queue to power station
The Electricity Authority counted 288 generation projects in its pipeline worth 44.3 gigawatts as at October 2025, against installed generating capacity it measured at about 10.6 gigawatts in 2024. It said in September 2025 that "it may be uneconomical to build all 44.3GW of projects", and it puts the average time from joining the connection queue to completion, for generation projects, at four and a half years.
BCG gives a 50 to 100 megawatt data centre two to three years from decision to operation, and new wind or geothermal generation with its grid work three to six. The consultancy's February 2026 study for the sector estimates 21 terawatt hours of untapped conventional geothermal, five times the largest shortfall it forecasts to 2030, and no developer has committed to build any of it.
Brown wants the campuses to underwrite the generation. "At a principled level, I want AI data centres underwriting new generation and growing generation in New Zealand." Economic Growth Minister Nicola Willis said MBIE advised her in July 2026 that the data centres coming on in the next 12 months were not expected to put upward pressure on electricity prices, given the arrangements they had in place.
Southdown is too small, Hamilton says
Forsyth Barr analyst Andrew Harvey-Green asked whether Mercury's former Southdown site in Auckland, where a gas-fired station ran until the end of 2015, could do what Contact is proposing at Stratford. "Not really, no," Hamilton said. "We did a pretty detailed assessment of the site, and it just is not big enough for the sort of scale that's needed for these AI factories or data centers."
Harvey-Green also asked when the Southland substation would be ready. Hamilton called it "definitely one of the key milestones on the critical path", and tied it to the campus timetable: "you can look at that milestone and think about the target of a 2028 coming on stream, and that we're lining that up pretty closely with our ability to deliver Puke Kapo Hau." Puke Kapo Hau is the 192 megawatt Otago wind farm Mercury committed NZ$506 million to in August 2026.
Mercury bought 12.7 per cent of Datagrid and a seat on its board in July 2026. Its results presentation lists the stake under options, one tier below its committed projects, with further equity "optional and subject to separate approval". Datagrid's contractor HEB began earthworks at Makarewa on 18 August 2026.
What to watch
Meridian and Genesis. Meridian reports its full-year result on 26 August 2026 and Genesis on 27 August 2026, with Hamilton's remarks on the record.
The decision to commit the money. Datagrid expects to commit to the build before the end of 2026, and Mercury's slide makes any further equity a separate approval.
The operating fleet. New Zealand runs 208 megawatts of colocation capacity across 36 facilities. Datagrid's approved 280 megawatts and the 250 megawatts sought at Stratford would each exceed it.
The pipeline count. New Zealand's gigawatt decade tracks what is built, approved and proposed against the gates each project still has to pass.