OpenAI pulls out of landmark £31bn UK investment package
OpenAI has put on hold plans for a landmark project to strengthen the UK’s AI capabilities, citing high energy costs and regulation.
Stargate UK was a part of the landmark UK-US AI deal
announced last September, in which US companies appeared to commit £31bn to the UK’s tech sector, part of a larger series of investments intended to “mainline AI” into the British economy.
A Guardian investigation last month revealed many of these were “phantom investments” and a supercomputer scheduled to go live in 2026 was this March still a scaffolding yard in Essex. That supercomputer was to be built by Nscale, a UK firm that had never built a datacentre before but said it was aiming to deliver the project in 2027. Nscale was also to build key datacentres for Stargate UK.
The Stargate project was to support Britain in building out “sovereign compute” - infrastructure that would allow the government and other UK institutions to run AI models on datacentres in the country. This is in theory important to the security of British data, for institutions and individuals.
An OpenAI spokesperson said: “We see huge potential for the UK’s AI future. 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.”
OpenAI’s exact commitments, under the Stargate project, were always vague. It was announced in September, during Donald Trump’s visit to the UK, and came as the Labour government sought to make AI and datacentres central to economic growth plans.
Framed in soaring language - Stargate was to “power the UK’s economy” and “boost its global competitiveness” - the crux of the commitment, from OpenAI, was that the company would “explore the offtake” of 8,000 highpowered Nvidia chips at Stargate datacentres constructed by its partner, Nscale.
This language meant that it planned to consider, in the spring of this year, either purchasing or renting 8,000 Nvidia GPUs (graphics processing units, which are crucial for powering AI systems). Contacted by the Guardian several weeks ago, the company said it had no updates on whether it was going ahead with this plan.
It was announced in September, during Donald Trump’s visit to the UK, and came as the Labour government sought to make AI and datacentres central to economic growth plans.
Tom Hegarty, the head of communications at tech equity organisation Foxglove, said OpenAI’s chief executive, Sam
Altman, was “fast racking up a record of U-turns any government minister could be proud of”, after the recent closure of OpenAI’s video-generation app Sora and Altman’s previous claim that AGI (artificial general intelligence) would be achieved by 2025. “At least it’s good news for cashstrapped gamers with 8,000 Nvidia chips now presumably going spare,” he added.
“But that hasn’t stopped ministers from jumping fully aboard the AI hype train,” said Hegarty. “In January 2025, thentech secretary, Peter Kyle, said a new supercomputer in Essex would be ‘the largest UK sovereign AI datacentre’ by the end of 2026 and ‘a fresh start for our economy and for working people’. Instead, a year later the ‘supercomputer’ was still a scaffolding yard.” A Guardian investigation last month into the AI investments found work was yet to begin on the supercomputer site 12 miles north of London.
“The government needs to wean itself off its bad habit of believing every dodgy claim it’s told by Big Tech - including OpenAI - starting with the idea they can cover the UK in powerguzzling datacentres without sending our efforts to combat climate change back to the stone age,” said Hegarty.
High energy costs, rising further because of the US-Israel war on Iran, are expected to delay or derail AI datacentre projects worldwide. The UK’s industrial electricity prices were already the highest in Europe before the start of the war.
“OpenAI halting their flagship British investment is a stark warning: Britain is becoming too expensive to build in,” said Sam Richards, the chief executive of pro-growth campaign group Britain Remade. “When global
tech firms cite sky-high energy costs and slow regulation, ministers must pay attention and meaningfully act.”
Andy Lawrence at the Uptime Institute said OpenAI, Nscale, and the government all have reasons not to proceed with the project at this point.
He said the government has a lot of concerns right now around energy and costs, and that OpenAI is worried about competition from Anthropic, while Nscale was struggling to get expertise and equipment.
“The government was not able to make sufficient commitments to be a client. I think the overall demand for all of this wasn’t, and still isn’t apparent. The whole sense of urgency has dissipated,”
Lawrence said.
Nscale has been approached for comment.