OpenAI Pauses UK Data Centre Due to Energy and Policy Issues

OpenAI has paused its Stargate UK infrastructure project, halting progress on a planned data centre footprint as it reassesses conditions in the British market.

The company pointed to high industrial electricity prices and continuing regulatory uncertainty as the main reasons for suspending the rollout. An OpenAI spokesperson said the firm remains committed to the region: “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.”

Announced in September 2025 with hardware partners Nscale and NVIDIA, Stargate UK was positioned to bolster sovereign compute capacity. 

At the time, CEO Sam Altman said the partnership would “help accelerate scientific breakthroughs, improve productivity and drive economic growth,” building on the UK’s “world‑class researchers” and policy support for AI.

Cobalt Park plans on hold

One of the first sites, at Cobalt Park in North Tyneside, is now on pause, alongside other unconfirmed locations. 

Initial plans called for deploying up to 8,000 GPUs in Q1 2026, scaling to 31,000 GPUs to support specialist workloads across regulated industries, finance and national security.

Progress has stalled amid persistently high power prices – among the most expensive globally for industry – and delays in securing grid connections. Nscale declined to comment on the suspension and NVIDIA has not publicly addressed the shift.

The North Tyneside installation was designed to be considerably smaller than OpenAI’s domestic Stargate initiative in the US, which has been reported as a US$500bn infrastructure commitment over four years.

Copyright and compliance concerns

In addition to energy costs, OpenAI is weighing the UK’s evolving rules on training data and copyright. Industry sources indicate apprehension over whether and how copyrighted material can be lawfully used to train generative models at scale.

Earlier this year, lawmakers considered an exception with an opt‑out mechanism for creators, an approach that could have streamlined model training. 

Following strong opposition from the creative sector, a government report published in March noted respondents overwhelmingly rejected the proposal, leaving the landscape unsettled. Without clear guidance, major developers appear reluctant to commit large, long‑lived physical infrastructure.

Government response

The pause is a setback for the UK’s national technology agenda. 

The September 2025 agreement was part of a wider £31bn (US$41.6bn) investment push touted as a catalyst for growth. Technology Secretary Liz Kendall had previously highlighted the tech sector’s rapid expansion, 23 times faster than the broader economy.

A UK Government spokesperson defended the country’s track record, citing more than £100bn (US$134.2bn) in private investment attracted under the current administration: “Our focus is on continuing to create the right conditions for investment in the UK’s AI and data centre infrastructure. We are continuing to work with OpenAI and other leading AI companies to strengthen UK compute capacity.”

What’s next?

OpenAI says it has not closed the door on UK hardware expansion and remains in discussions with Nscale on potential future collaborations.

“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 spokesperson said.

In the meantime, the company plans to advance commitments made under a July 2025 Memorandum of Understanding on deploying frontier AI models in public services, while investing in talent and expanding its local presence. 

“We are investing in talent and expanding our local presence, while also delivering on the commitments under our MOU with the Government to adopt frontier AI in UK public services,” the spokesperson added.