Lessons from overseas AI infrastructure policy for New Zealand

The first article in DLA Piper’s Compute Conditions insights series considers overseas policy lessons for developing resilient, bankable data centre and AI infrastructure in New Zealand.

 

Key takeaways

• New Zealand has a credible opportunity to attract data centre investment but should implement policies to select projects that merit support.
• The UK, Denmark and Australia show a shift from attracting data centres to selecting projects that manage scarce electricity grid, land and regulatory capacity.
• A New Zealand framework should balance infrastructure readiness and delivery speed with energy resilience, community benefits and national-interest safeguards.

 

From attraction to selection

Data centres are becoming core economic infrastructure. Artificial intelligence (AI), cloud migration and growing digital workloads are increasing demand for computing capacity.

This article is the first in DLA Piper New Zealand’s Compute Conditions series on the legal and commercial settings shaping data centre investment and development in New Zealand. The series examines the conditions required to turn demand for compute – the processing capacity needed to run AI, cloud and other digital workloads – into deliverable, resilient and bankable infrastructure.

The International Energy Agency projects that global data centre electricity demand will more than double by 2030. In New Zealand, Boston Consulting Group estimates that AI could represent an NZD70 billion strategic opportunity over the next decade.

New Zealand is well positioned to take advantage of this opportunity, with a predominantly renewable electricity system, political stability, available land, a strong rule of law and improving digital connectivity. However, the scale of potential demand also raises infrastructure, energy and public policy concerns.

Converting the opportunity into responsible investment will require coordinated action. New Zealand will need to move quickly enough to remain competitive while managing electricity demand, network timing, water and land use, local impacts, public trust, data sovereignty, cyber security and overseas ownership.

"Some overseas governments are already moving from attraction to selection – asking which projects should be prioritised, what infrastructure burdens they should carry and whether local communities and national economies receive sufficient value." Justin March, Partner, Real Estate

The UK, Denmark and Australia are comparable jurisdictions that are further along in their data centre investment journeys. Each experienced a relatively open, investment-led boom before introducing restrictions to manage pressure on electricity grids, support sustainability goals and respond to national expectations and social licence concerns.

New Zealand may be on the cusp of its own investment boom and can draw on lessons learned from the experience of these jurisdictions.

 

Overseas lessons

United Kingdom – flexible connections and system operability

The UK’s current reform programme focuses on the interface between large electricity users and the electricity system. The UK Government has consulted on accelerating electricity network connections for strategic demand, including data centres.

The Office of Gas and Electricity Markets (Ofgem), the UK’s electricity regulator, is also progressing demand connection reforms intended to connect viable and strategically important projects faster while maintaining system security.

The reforms respond to a large and growing connection queue, non-viable projects blocking more developed projects and the lack of mechanisms to prioritise strategic demand. They highlight the drawbacks of a simple chronological queue for grid access, in which speculative projects reserve scarce capacity while more credible projects wait.

The UK is also looking beyond network connection reform to new sources of electricity supply. Its small modular reactor (SMR) programme, led through Great British Energy – Nuclear and Rolls-Royce SMR, is intended to support energy security and long-term clean power growth. The UK Government’s Advanced Nuclear Framework also expressly links advanced nuclear power with the energy needs of AI, data centres and industry.

Denmark – prioritising scarce grid capacity

Denmark has many attributes that data centre developers value, including renewable electricity, a cool climate, stable government and strong digital infrastructure.

Recent reporting indicates that Denmark has moved away from first-come, first-served allocation for very large electricity users. Instead, project maturity, progress and grid-friendliness are becoming more important.

The Danish Government has also proposed emergency grid measures to address increasing strain on its electricity system. These measures would effectively halt new data centre projects by prioritising critical societal functions and electrification ahead of large new data centres that are not linked to those functions.

Australia – national expectations and social licence

Australia has moved from indicative national expectations to a proposed mandatory framework for large-scale data centres and AI infrastructure. On 15 July 2026, Prime Minister Anthony Albanese announced that the Australian Government will introduce Australian Standards for AI, building on its earlier Data Centre Expectations.

The proposed standards would impose legal obligations on large data centres to underwrite their own new power supply, pay their full share of grid connection costs, reduce demand when needed to support the grid and be as water efficient as possible. The Federal Government also intends to work with States and Territories on appropriate locations for large data centres, with input from local communities.

The announcement reinforces the broader policy direction: data centre investment will be welcomed where it supports national objectives, but projects will be expected to carry their own infrastructure burden and demonstrate social licence.

United States – acceleration, power supply and federal-state tension

The United States provides a useful counterpoint. Federal policy has focused more on accelerating AI data centre infrastructure than on screening or prioritising projects.

Executive Order 14318, issued in July 2025, seeks to fast-track the permitting of large AI data centres and supporting infrastructure. US policy treats AI infrastructure as strategic national infrastructure and seeks to unlock land, power and approvals at pace. It is less concerned with asking which projects should proceed and more focused on ensuring that generation, transmission and permitting settings can support rapid delivery.

The US experience also shows the limits of a pure attraction model. Rapid data centre growth is creating pressures similar to those faced by other countries, including pressure on electricity affordability and grid reliability, as well as water and land use. State and local governments are increasingly responding with reporting obligations, cost-recovery measures, moratoria and other controls.

 

A New Zealand framework

New Zealand should not copy overseas settings wholesale. Overseas policy settings often reflect where each jurisdiction sits in the data centre investment cycle.

However, several principles are transferable. New Zealand appears to be approaching an investment wave comparable to those experienced by the jurisdictions discussed in this article. It should therefore move early to establish a balanced, long-term framework that enables investment while protecting system resilience, environmental outcomes and public confidence.

The objective should be to create faster pathways for credible projects, alongside greater scrutiny of environmental, community and national-interest issues.

The practical task is to define what good looks like. If New Zealand does that well, it can compete for AI infrastructure investment on terms that are credible, durable and aligned with its long-term interests.

A good New Zealand data centre investment policy should:

• Acknowledge that attraction and selection are not mutually exclusive. Investment in valuable projects should be encouraged, but appropriate safeguards must remain.
• Distinguish credible projects from speculative demand by assessing project readiness, including land, consenting, energy supply, connection strategy, funding and delivery capability.
• Support new energy investment by ensuring that projects contribute to new renewable generation, network investment, storage, demand flexibility or other system benefits. New large-load investment should be matched by new electricity generation rather than simply consuming existing system capacity.
• Address environmental and community impacts early. Water use, emissions, waste heat, noise, land use and construction effects should be assessed transparently. Engagement with communities, iwi (Māori tribal groups) and local authorities should occur early enough to influence project design.
• Treat cyber resilience and data sovereignty as core issues. Data centres support critical sectors, including finance, health care, media and government. Assessments should consider physical security, cyber security, operational resilience, sensitive data, offshore access rights and continuity planning.
• Make prioritisation transparent. Investors need certainty, communities need trust and regulators need decision-making criteria that can be applied consistently.

Be tailored to New Zealand’s smaller electricity market, dry-year risk and regional grid constraints, and account for Te Tiriti o Waitangi/Treaty of Waitangi, iwi and community interests, particularly where prioritisation and framework models are inspired by those adopted in other jurisdictions.