OpenAI is putting plans for a multi-billion-pound data centre and AI investment project on ice with the ChatGPT-maker claiming the decision is a result of the UK’s high energy costs and regulation.
The Stargate UK project – an AI infrastructure partnership with NVIDIA and Nscale – included plans for a large data centre in Cobalt Park, North Tyneside, and the delivery thousands of chips for AI development.
The plans were first announced last year as part of a wider £31bn commitment from US tech giants to invest in the UK’s AI sector.
But an OpenAI spokesperson has now said the company had paused the project and will only move recommence when conditions “enable long-term infrastructure investment” in the country.
“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,” the 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 move comes just months after OpenAI rowed back its stated £1.04tn ($1.4tn) infrastructure commitments by 2030 to £446bn ($600bn). The tech giant is now targeting about £208.3bn ($280bn) in revenue by 2030 after bringing in just under £9.75bn ($13.1bn) in 2025.
In recent months the AI company has faced mounting concerns over whether it can generate enough revenue to cover costs. Just last month OpenAI shut down its AI video-generation app Sora, less than two years after it was first unveiled, and pulled out of its $1bn content partnership with Disney, which would have seen the entertainment giant’s licensed characters appear on the app.
Open AI’s decision to pull the plug on its UK investment, reflects a wider trend across UK real estate where access to affordable, reliable power is becoming a critical factor in investment decisions, said Alan Thomson, director of global strategic energy programmes at real estate consultancy Arup.
“In part this is due to the ‘marginal pricing’ system that means gas often sets the price of our electricity – even the portion that comes from renewables,” he said.
“There is no single solution. Reducing cost pressures and improving connection timelines will require a more strategic shift in how the electricity system is planned, built and operated, including expanding network capacity, accelerating domestic clean power, and improving how supply and demand are managed.”
A government spokesperson said: “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.”