This is IMO just a CO2 accounting trick, basically, and does not really achieve anything, because all that happens is that the average electricity user in that area gets a bit "dirtier" (on paper) while Meta becomes "zero emission" (on paper), meanwhile nothing actually changed.
Don't get me wrong, this is not harmful, but building new emission free power or replacing fossil plants is much more useful than paying some cash to basically shift blame around.
> For example, there is a data center being built in New Zealand that will be grid connected but the power will be supplied from a huge hydro dam
Sure-- but you still really want that grid connection, both to sell power when you have too much and also to buy power when the turbines are being maintained or water is running low. My point here is just that it almost never really makes sense to couple plant and datacenter directly and skip the grid connection.