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Infratil expects New Zealand's growth in data centres to match that of Sydney's, and attract enough international investment in new renewable energy to power them.
Infratil already committed $479.4 million (A$433m) investment in December to help data centres firm CDC build more hyperscale facilities, with another $276.8m (A$250m) investment over the next two years.
"We're investing the money to support the future growth of the company," Infratil chief executive Jason Boyes said, adding the New Zealand operations were expected to double in size over over the next five years.
"This investment underwrites the future growth of CDC that we've forecast and told the market about.
"It's a good sign that we're putting it in, because it shows we're confident, alongside with our partners, that the investment is going to be needed."
The investment would also maintain Infratil's 48 percent stake in CDC.
"I think we have nine built (centres) at the moment, and I think we're building another between five and seven, so we're looking to roughly double the size of the business in the next five years," Boyes said.
"I mean, they talk about Sydney being a one-to-two gigawatt* market, which is an enormous market over the next 10 years," he said, noting Sydney's population was roughly the same size as New Zealand's.
"So that might give you a sense of it. There's quite a lot of potential."
Hyperscale data centres were super-sized facilities that cost hundreds of millions of dollars to build, he said.
Hyperscale data centres were large stand alone buildings of at least 1,000 square metres, housing in excess of 5000 computer servers, suitable for integrating AI.
"So it's really putting boots on the ground and concrete in the ground to build these facilities."
Boyes said the growing demand for data centres in New Zealand was also driving up investment in the development of renewable energy.
"I think between us and our clients, ... the build that we're forecasting takes place over the next seven-to-10, years, so there's plenty of time to build the additional renewable energy resource needed to power them."
He said it was entirely appropriate for Microsoft to invest $300m in Contact Energy's recent geothermal development, and expected more international investment would follow.
"It's really on the customer. The customer is using the data and using the energy. That's how it works," he said.
"So the beauty we think of data centres is that it should trigger new renewable energy being brought on that wouldn't otherwise be brought on."
But concerns have been raised about the environmental impact of data centres amid the rise of AI, given the world's limited renewable resources.
Data centres are particularly energy-hungry and international companies are hoping to reduce their climate impact by using New Zealand's renewable electricity.
But with the energy network already stressed, there are calls to make sure any premiums data companies pay to access clean energy here are directed to growing wind, solar and other renewables.
There have also been concerns raised by Māori about control of their own data amid issues raised around security.
*(One GW is enough to power as many as a million homes, with New Zealand's current data centre power usage around 200 megawatts or one-fifth of a GW.)
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