Opponents of a $3.5 billion data centre near Invercargill have welcomed a Green Party policy that would halt further centres from being consented and want other political parties to consider tighter controls.

The Greens are calling for a one-year pause on new AI data centres until stronger rules and regulations are put in place.

Singapore-based company Datagrid has been given resource consent to develop the 78,000 square-metre factory in Makarewa.

The centre would use 280 megawatts of power, making it the country's second-largest electricity user, behind the Tiwai Point aluminium smelter.

The consents would include the ability to draw more than 600,000 litres of groundwater every day, although Datagrid has been adamant it will not use any groundwater, preferring Invercargill's naturally cool air temperatures and rainwater when needed.

Hundreds of people packed into the Invercargill Workingmen's Club at a 22 July meeting organised by the Southland Sustainable Resource Coalition to voice their concerns about the data centre.

Organiser Kelly Blomfield said people were worried about the environmental impact, water use and noise pollution.

"We don't want something that is taking massive resources out of our community without putting anything back in, and it's just the non-notified consent process where everybody finds out after the paperwork's signed and sealed, it's just not good enough," she said.

Blomfield said she supported the Greens' policy and hoped it would be considered by other parties.

"It is a fantastic policy and it's one that I hope all parties will adopt, that all parties will be looking at - this as a humongous potential crisis," she said.

"I understand that New Zealand wants to be part of a race to have data centres and to be forward-thinking, but why can't we be known as the country that said no? Like the country that said, 'you know what, we're actually going to put our people first'."

The centre is expected to create more than 1200 jobs during construction and between 50 to 80 permanent jobs, while a Boston Consulting Group report estimates that scaling up data centre infrastructure in New Zealand could unlock up to $70 billion in economic activity over the next decade.

Tech expert Dr Karaitiana Taiuru believed it was worth slowing down to consider alternative solutions to address some of the environmental risks posed by data centres.

Solutions could include treating seawater or wastewater so it could be used like fresh water if necessary, instead of using groundwater for cooling.

"This is a really good time for us to re-evaluate and say, 'look, there are alternatives'," he said.

Taiuru said the government needed to lead a cross-industry discussion, otherwise the country risked being left behind in the new age of AI.

The government was already paying overseas tech companies millions of dollars to store data, Taiuru said.

"If we bring these data centres back to New Zealand or create them in New Zealand then we lower the environmental impact on a global scale, we increase our own security and decrease taxpayer funding to pay for current infrastructure," he said.

Southland mayor Rob Scott said the $3.5 billion project would bring investment and jobs to the region in the short term, but questioned the long-term benefits and who profited from data the centre produced.

While there had been much criticism of the centre's non-notified resource consent process and people felt like they had no say, Scott said the process had been robust.

"What was very clear at that meeting last week was people care deeply about the environment and their backyard out here, and we need to make sure that it's not progress at all costs," he said.

A balance between enabling investment in data centres, and regulation, was important, Scott said.

"Everyone moans about the likes of councils and government having too much red tape and getting in the way of development until something comes through that they don't like, and then all of a sudden it's the opposite and council gets blamed for not stopping things," he said.

"Everyone's got the right to ask the questions and be curious, but we've got to be careful that we don't create uncertainty for anyone trying to invest in New Zealand as well, so it's a delicate line around how these things are done."

Prime Minister Christopher Luxon told Morning Report officials did not expect the data centre to put pressure on power prices.

"Data centres can be a net positive for the economy, they will create jobs, will create opportunities for us, and we do need some sensible rules," he said.

"That does mean things like making sure additional electricity generation happens, investments in grid stability, and that they pay for transmission upgrades and those kinds of things."

He said the government would have common-sense rules in place ahead of increased investment in data centres.

"We are an attractive place [for data centres] because we have some competitive advantages with high renewables, cooler climates, and political stability - that makes those investments attractive."

Luxon said New Zealand was "last cab off the rank" and must not get left behind.

Electricity company Mercury has spent $53 million to acquire a 12.7 per cent stake in Datagrid NZ.

Mercury chief executive Stew Hamilton said New Zealand had the capability to build data centres powered by renewable energy to support the country's economic growth.

He said the concerns raised around the use of water, power and jobs were legitimate.

"[They] are three things that absolutely should be addressed, and we think with this project that we have with Datagrid, we think they're well looked after and we're keen to be a part of that solution," Hamilton said.

"We absolutely believe that data centres should be building or should be coming on stream with additional power to make sure that it's contributing to New Zealand's grid."

Construction of the Datagrid centre in Makarewa is due to start in the next month, with the centre to open in 2028.