OpenAI pauses UK data centre project citing energy costs and regulation

ChatGPT-maker OpenAI is pausing a multi-billion pound UK data centre project aimed at boosting its AI infrastructure, citing concerns about high energy costs and regulation.

Its project, dubbed Stargate UK, included a large data centre in north-east England and making thousands of powerful chips for AI development available as part of a partnership with tech firms Nvidia and Nscale.

The agreement came alongside a wider £31bn package of UK tech investment, lauded as a sign of the country's potential to become an "AI superpower".

But an OpenAI spokesperson said on Thursday it would only move forward with Stargate UK when the "right conditions" could "enable long-term infrastructure investment".

"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," an OpenAI spokesperson said in a statement.

"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," they added.

OpenAI said when announcing its UK data centre project in September it would help strengthen the UK's "sovereign compute capabilities" and bolster its native AI development.

"This will help power the UK's future economy, boost its global competitiveness and deliver on the country's national AI Opportunities Action Plan," the company wrote.

Stargate UK, based at Cobalt Park, North Tyneside, was much smaller than OpenAI's US-based Stargate project - which committed a $500bn investment over four years to build new AI infrastructure.

But its announcement on Thursday comes as a potential blow to the government, which has championed home-grown tech and AI development as a way to bolster economic growth.

Technology secretary Liz Kendall said in a speech in January that the UK's AI sector had grown 23 times faster than the economy as a whole.

A government spokesperson said the UK's AI sector had attracted more than £100bn in private investment since the government came into office, and this was delivering jobs and opportunities for workers.

"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."

OpenAI added in its statement it would continue to invest in talent and expanding its presence in the UK, alongside delivering on commitments set out with the government about deploying powerful AI systems in UK public services.

The reasons given by the US tech giant are energy costs and regulation issues: but the reality is neither are particularly new. Even before the Iran war sent costs soaring, Britain's energy prices had long been significantly higher than in the US. And the UK's regulatory approach to AI has not changed much either. However, OpenAI's move also reflects how big tech does big business.

Earlier this week, the company outlined a set of "initial" policy ideas which included incentivising workers in the era of more powerful, capable AI systems with a four-day week on full pay - something it described as an "efficiency dividend".

The BBC understands concerns about the UK's regulatory environment include uncertainty over whether it would change the law to allow AI firms to train their systems using copyrighted works. It had previously been set to make this an "opt out" decision for creators - something that would have made it easier for AI firms to use copyrighted works to develop their systems.