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.
Why this matters
The Stargate UK withdrawal is legally and commercially significant on multiple dimensions. First, it directly implicates the UK's AI growth zone framework and the legal certainty around data centre planning permissions, grid connection agreements, and energy supply contracts — all of which need to be bankable for infrastructure investors to commit. Second, the copyright exception issue — the government's decision to delay reform of text and data mining (TDM) exemptions under the Copyright, Designs and Patents Act 1988 (CDPA) — has now demonstrably affected inward investment decisions, giving the ongoing TDM policy debate immediate commercial stakes. Third, any future Stargate UK recommitment will require careful structuring of government support, energy pricing arrangements, and IP licensing frameworks, creating multi-practice advisory mandates. The 'why now' is the convergence of record UK industrial energy prices and an unresolved regulatory environment for AI training data.
On the Ground
A trainee on an AI infrastructure investment instruction would review technology licence agreements between the data centre operator and the AI company to identify termination triggers and force majeure provisions, and assist with a regulatory impact assessment memo summarising the current state of the TDM copyright exception debate and its implications for the client's data training strategy.
Interview prep
Soundbite
The UK's unresolved TDM copyright exception is now costing the country inward AI investment — that policy gap is a live legal advisory issue, not a future one.
Question you might get
“How does the UK's current copyright framework under the CDPA affect AI companies training models on publicly available data, and what legal risk does the absence of a broad TDM exception create for a company like OpenAI operating in the UK?”
Full answer
OpenAI has paused the Stargate UK data centre project, citing high energy costs and regulatory uncertainty — including the government's decision to delay reforming the copyright rules governing AI training data. This matters for law firms because it confirms that the UK's text and data mining (TDM) copyright exception under the CDPA is a live commercial blocker, not an academic policy question, and clients across the AI supply chain need advice on how to structure data licensing arrangements under current law. The broader picture is that the UK is competing with the US, UAE, and other jurisdictions to attract AI infrastructure investment, and its cost-of-energy disadvantage — already structural, and worsened by the Iran conflict — is now a documented barrier. The legal opportunity lies in advising both AI companies on navigating UK regulatory uncertainty and government on designing the right frameworks to attract recommitment.
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