OpenAI has paused its Stargate infrastructure project in the UK, in a setback for the Government’s hopes of positioning the country as a major destination for AI and data centre investment.

The company said the decision was driven by the cost of energy and the broader regulatory environment, two issues that have increasingly come to define the debate around large-scale digital infrastructure in the UK.

“We see huge potential for the UK‘s AI future,” the company said in an emailed statement on Thursday, as reported by Bloomberg.

“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.”

Stargate UK was supposed to be one of OpenAI’s biggest investments outside the US, where it has pledged to spend $500 billion on its flagship Stargate project. The whole project was a joint venture between OpenAI, Nscale and Nvidia, and while there were murmurings in recent days that the project would be delayed – OpenAI has now confirmed that the plans are on hold indefinitely. 

Was Stargate UK ever real? 

The decision to pause the project will be a major setback for Keir Starmer and the Labour Government, with it having put AI at the heart of its economic growth agenda. Despite the setback, however, some will be wondering whether Stargate UK would have ever become a reality anyway. 

While it was announced to coincide with Trump’s visit to the UK, it was announced amidst a smattering of other US investments into building out the UK’s AI infrastructure. That includes Microsoft’s plans to spend $30 billion in the UK between 2025 and 2028, as well as Blackrock’s planned £500 million investment in UK data centres. 

Unlike those two announcements, however, OpenAI never disclosed the scale of its proposed development, opting to be vague. At the time of announcement, OpenAI noted that its UK partner, Nscale, was set to significant expand its planned UK capacity for Stargate UK and that the project was expected to be based across a number of sites, including Cobalt Park, which will form part of the AI Growth Zone in the North East. Little else was shared at the time. 

Adding further skepticism to the promise of Stargate UK was the reality that faced the flagship Stargate project in the US. While that project promised $500 billion of investment and large-scale deployment to build 10 GW of capacity, it hasn’t exactly delivered.

Last month it was announced that OpenAI was reorganising its team behind the Stargate projects, opting to rent more AI servers from major cloud providers rather than build its own data centres. That’s despite in September 2025, Softbank, one of the key partners behind the Stargate project stating that it was ‘ahead of schedule’. 

What does this mean for the UK’s AI plans?

Despite whether or not Stargate UK was ever real or not, its pause will raise awkward questions about whether the UK can genuinely compete for AI infrastructure at the highest level. That’s especially pertinent as OpenAI specifically cited high energy costs as one of the reasons behind the project’s indefinite delay. As the UK still has some of the highest energy costs in Europe, undoubtedly other developers will be asking the same question. 

The pause also leaves the Government in a familiar position: keen to talk up the strategic importance of AI, while still having to confront the harder task of making the UK commercially viable for the infrastructure that underpins it.

For all the promise of AI Growth Zones – it seems that what the UK Government needs to fully realise the promise of AI investment is clear to see. That includes cheaper energy costs and a more favourable regulatory environment – one that maybe doesn’t see local councils proposing moratoriums on data centre developments. 

Despite pausing its Stargate UK investment, however, OpenAI has stressed that it is not walking away entirely from the UK. The company said it will continue discussions with the Government on an agreement to provide ChatGPT and other services for public services, even as the infrastructure side of the relationship remains on hold.