OpenAI says energy costs and regulation hold back major UK investment
ChatGPT developer OpenAI has halted plans for a major data center project in the UK, saying energy costs and regulations were hindering investment.
The US tech giant had agreed to locate its Stargate data center project in a new artificial intelligence (AI) growth region in the north-east of England.
Stargate UK was expected to be based in a number of locations, including Newcastle and Cobalt Park near Blyth.
But OpenAI said the plans were being shelved until the “right conditions” were in place to allow long-term investment in the UK’s infrastructure.
An OpenAI spokesperson said: “We see huge potential for the UK’s AI future.
“London is home to our largest international research center and we support the Government’s ambition to become an AI leader.
“AI computing underpins this ambition; 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 reference to energy costs comes at a time when prices are rising further due to the US and Israel’s war with Iran.
The United Kingdom is one of the countries particularly exposed to rising wholesale costs due to its reliance on gas-fired energy rather than sources such as nuclear and renewable energy, the International Monetary Fund (IMF) said last month.
Because data centers are powered by huge amounts of energy, they are more likely to be subject to volatile prices.
OpenAI added: “Meanwhile, we are investing in talent and expanding our local presence, while also delivering on our commitments under the Memorandum of Understanding (memorandum of understanding) with the Government to adopt leading AI across UK public services.”
The Stargate project aims to invest billions of dollars in AI infrastructure in the US, with funding from OpenAI, SoftBank, Oracle and MGX, and in partnership with technology giants such as Nvidia and Microsoft.
Building it into the UK comes as part of the landmark technology deal between Britain and the US, announced last September during President Donald Trump’s second state visit.
The deal also included Microsoft’s commitment of US$30bn (£22.3bn) in the UK, the largest it has ever made, to fund the expansion of the UK’s AI infrastructure.
Conservative MP and shadow science minister Ben Spencer said: “When global firms cite high energy costs and regulatory uncertainty as reasons to leave, that tells you everything about the direction of travel.
“For too long, Labor has prioritized big tech headlines while neglecting our home-grown start-ups, as well as the key issues that attract investment into the country.”
