The $700million storage centre is planned for the Makarewa area north of Invercargill and it would initially cover 25,000sqm and use 60MW of power.
Datagrid project leader Remi Galasso expected construction to start before the end of next year.
"We are obviously committed to work with local construction companies as much as we can," he said.
Once in operation, Datagrid would employ 25 people.
Mr Galasso confirmed the operation would need a large anchor tenant — such as Microsoft, Google or Facebook — to proceed.
Globally, the demand for data centres is growing.
Southland’s cool climate is one element that improves the viability of the venture, because of savings that could be made on cooling systems.
Access to renewable energy is another factor tech giants could find favourable.
Meridian Energy is a partner in the project and has agreed to supply electricity from the Manapouri hydro power scheme.
If the facility is scaled up to 100MW, it could consume as much power as a town of 80,000 people.
Two subsea cables would be laid from Invercargill — one to Sydney and Melbourne in Australia and one to Mangawhai Heads north of Auckland — as part of the project.
One of the cables would link New Zealand cities on the east coast.
Mr Galasso said Christchurch, Wellington and Auckland were confirmed in the business plan and the possibility of a branch in Dunedin was being studied.
Locating a data centre of such size in New Zealand is expected to enhance the country’s tech infrastructure.
"We strongly believe in the development of a digital ecosystem for the South Island, involving not only Invercargill but also Dunedin, Christchurch and obviously Queenstown," Mr Galasso said.
Dunedin’s Centre of Digital Excellence establishment director Tim Ponting said development of the centre would benefit some consumers and the system would be more efficient.
He expected its employees would include highly trained technicians and ancillary staff such as software engineers.
He described a data centre as being like a series of computers in racks and a lot of power was needed to keep them cool.
Datagrid is headed by Mr Galasso, who founded Hawaiki Cable, and by Callplus Ltd founder Malcolm Dick.
"Until now, the lack of international connectivity into New Zealand has been a limiting factor for establishing data centres, but with the arrival of the Hawaiki Cable in 2018, that barrier can finally be lifted," Mr Dick said.
Hawaiki Cable founding chairman Sir Eion Edgar, of Queenstown, said the data centre would be a long-term, sustainable project.
"The idea, I think, is excellent."
Dunedin City Council economic development programme manager Fraser Liggett said the centre could help to strengthen and support Dunedin’s digital and creative economy.
Opportunities for businesses to develop niches could develop from it, he said.
The project could pick up the slack from electricity consumed by the Tiwai Point aluminium smelter, which may close by the end of next year, although smelter owner Rio Tinto has continued discussions with the Government about keeping it open for longer.
The venture would need resource consents from both the Southland District Council and Invercargill City Council.
