OpenAI halts £31 billion Stargate UK project over rising energy costs and regulatory deadlock

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UK energy costs are spiraling, making building a data center more expensive

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  • OpenAI has paused its planned Stargate UK data center project
  • The company cited energy costs and regulation as causes for the halt
  • Stargate UK was slated to be well underway by Q1 2026, but little progress had been made

OpenAI has pressed pause on its Stargate UK data center project over rising energy costs and regulatory uncertainty in the country.

The project would have seen a large data center built in north-east England, alongside £31 billion in wider tech investments across the UK.

For now, Stargate UK will not be going ahead, but the project could resume if the “right conditions” were to “enable long-term infrastructure investment,” an OpenAI spokesperson said.

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What is Stargate UK?

When announced in September 2025, OpenAI said Stargate UK would “help power the UK’s future economy, boost its global competitiveness and deliver on the country’s national AI Opportunities Action Plan.”

The project, in partnership with Nvidia and Nscale, was scheduled to “explore offtake up to 8,000 GPUs in Q1 2026 with the potential to scale to 31,000 GPUs over time,” with Nvidia CEO Jensen Huang stating that the project would help the UK become an “AI superpower.” The project has missed this key milestone.

While it did not rival its US sister project in a similar scale of investment, the UK project was expected to act as a catalyst for business growth and innovation. The construction of data centers and supercomputers within UK territory was also intended to help protect the sovereignty of British data - whether originating from research projects from educational institutions such as Oxford or enterprise AI development.

Why has Stargate UK been paused?

The main factors preventing the go-ahead of Stargate UK are the cost of energy, which has become the highest in Europe, and regulatory uncertainty.

Energy costs have risen steadily in the UK, with the war in Ukraine and the uncertainty surrounding the recent conflict in the Middle East contributing to steep jumps in energy prices. The price of energy in the UK is set by the most expensive form of energy production, and the UK relies heavily on natural gas for heat and power.

When supplies are threatened or when demand exceeds supply, the cost of natural gas rises and brings the wholesale cost of electricity in the UK up with it. OpenAI also listed a lack of dedicated infrastructure that would enable datacenters to access reliable energy supplies among reasons for putting the project on hold.

As for regulatory concerns, OpenAI omitted specifics in its statement. But the concerns could surround the UK government's recent U-turn on AI copyright after proposed legislation received serious criticism and backlash from UK artists such as Sir Elton John and Dua Lipa.

OpenAI has a history of publicly advocating for strong regulations on AI while simultaneously lobbying to weaken AI regulations and advocating for voluntary commitments over legally binding regulation.

A real project or a paper tiger?

There are other questions surrounding the feasibility of the project. For example, Nscale - one of the partners in the Stargate UK project - was set to build a supercomputer that would open in 2026.

However, a Guardian investigation found development on the supposed site of the supercomputer had not started, and the site remained a scaffolding yard.

Despite Nscale having stated publicly it had purchased the site, at the time, the scaffolding yard remained under ownership by a different company, with land records showing no evidence of Nscale’s ownership.

Additionally, the UK government issued a press release stating a £1.9 billion investment contract had been signed with Nscale. However, no such contract was signed, and the government admitted that it was “not playing an active role in auditing these commitments.”

The government also said that the full £2.5 billion investment earmarked for the development of the supercomputer was “not a formal contract, rather an intention to commit capital.”

The project has also been plagued by wider accounting errors, questionable contracts, and a lack of tangible commitments to investments.

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Benedict Collins
Benedict Collins
Senior Writer, Security

Benedict is a Senior Security Writer at TechRadar Pro, where he has specialized in covering the intersection of geopolitics, cyber-warfare, and business security.

Benedict provides detailed analysis on state-sponsored threat actors, APT groups, and the protection of critical national infrastructure, with his reporting bridging the gap between technical threat intelligence and B2B security strategy.

Benedict holds an MA (Distinction) in Security, Intelligence, and Diplomacy from the University of Buckingham Centre for Security and Intelligence Studies (BUCSIS), with his specialization providing him with a robust academic framework for deconstructing complex international conflicts and intelligence operations, and the ability to translate intricate security data into actionable insights.

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