The $100 million centre, to be built by Auckland-based firm Datagrid New Zealand on a 43ha site in Makarewa, Southland, is expected to be available for use by 2024.
"The ability to process, transfer and store enormous digital files has become increasingly vital for researchers worldwide," university deputy vice-chancellor, research and enterprise Richard Blaikie said.
"Some of our researchers’ most data-intensive work involves MRI scans, genomics and results from sensors at field research sites, and having a world-leading data centre next door would help researchers stay at the forefront of their fields."
Datagrid chief executive Remi Galasso said the Southland site had been chosen because it could be powered by the Manapouri hydro-electric power scheme, and because the region’s cool average temperature would aid the centre’s efficiency and further lower cooling costs.
The facility will comprise up to 10 6500sq m modules.
Each module will contain servers, hard-disk drives and other computing equipment, air conditioning, power management, security, monitoring, and fire protection.
University head of IT Wallace Chase said signing on to use the data centre meant Otago would no longer need to update its own ageing data centre.
The university also had the option of taking part in the Hawaiki Nui project, a data cable planned to connect Christchurch, Dunedin and Invercargill to Sydney, Los Angeles, Hawaii, Singapore and Jakarta.
That project is being built by Auckland company Hawaiki, which has the same parent company as Datagrid, BW Digital.
"Our partnership with the University of Otago also allows it to consider becoming a landing station for Hawaiki Nui, which would create a new internet gateway in Dunedin upon its scheduled completion in 2025," Mr Galasso said.
