In a setback for the UK’s AI infrastructure ambitions, OpenAI has paused its proposed multi-billion pound data centre project, citing high energy costs and regulatory uncertainty.
The project, known as Stargate UK, included plans for a major data centre in north-east England and access to advanced AI chips through partnerships with Nvidia and Nscale.
The initiative was part of a broader £31 billion UK tech investment push and was seen as a key step toward positioning the country as an AI leader. However, OpenAI said it will move forward only when conditions support long-term infrastructure investment.
“We see huge potential for the UK’s AI future. London is home to our largest international research hub, and we support the government’s ambition to be an AI leader,” an OpenAI spokesperson said.
“AI compute is foundational to that goal. We continue to explore Stargate UK and will move forward when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment,” the statement added.
The facility was planned at Cobalt Park in North Tyneside and aimed to strengthen the UK’s sovereign compute capabilities while supporting domestic AI development. Compared to OpenAI’s US Stargate project, which involves a $500 billion investment over 4 years, the UK version was significantly smaller.
The pause comes as a challenge for the UK government, which has been promoting AI and technology investment as drivers of economic growth. Officials maintain that the country has attracted over £100 billion in private AI investment and continues to work with industry players to expand compute capacity.
OpenAI said it will continue investing in talent and expanding its UK presence, including deploying AI systems in public services.
The company cited energy costs and regulatory issues as key concerns. The UK has historically faced higher energy prices compared to the US, and there is ongoing uncertainty around AI regulation, including rules on using copyrighted material for training AI models. Proposed changes to make such use an opt-out system have faced opposition from artists, including Elton John.
The move reflects broader industry dynamics, where large technology firms weigh infrastructure costs, policy clarity, and long-term scalability before committing to major AI investments.
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