OpenAI halts £31bn Stargate UK data centre project as high energy costs and regulatory uncertainty derail the UK's flagship AI infrastructure investment

OpenAI has paused its Stargate UK data centre project, originally scheduled to be built in north-east England in Q1 2026, citing the UK's high industrial energy costs and regulatory uncertainty. The project — which was announced in September 2025 during US President Donald Trump's state visit to the UK and was part of a broader investment package touted at £31 billion — was intended to deploy thousands of AI chips through data centre start-up Nscale and represented one of the UK government's flagship AI growth zone (government-designated areas with streamlined planning and connectivity for AI infrastructure) investments. OpenAI stated it 'continues to explore Stargate UK' but will only move forward 'when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment.' The UK's industrial electricity prices were already the highest in Europe before the onset of the Iran conflict; they have risen further since, driven by the disruption to global energy markets. A decision by the UK government to delay changes to AI training data copyright rules — which would have permitted AI companies to use copyrighted material for model training without licensing — also contributed to OpenAI's assessment that the UK regulatory environment is not yet sufficiently conducive. In recent weeks, OpenAI has also scaled back commitments to its flagship Stargate data centre in Abilene, Texas, and shut down its AI video application Sora, as it seeks to focus resources on competing with Anthropic and Google. The UK halt is part of a broader recalibration of OpenAI's capital deployment strategy rather than a UK-specific decision alone.

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