OpenAI has put plans for its UK-based Stargate AI infrastructure project on hold, saying that it will only go forward once the “right conditions”, including government legislation surrounding AI, are in place.

The standstill, first reported by Politico, has been linked to the UK’s soaring energy costs and the uncertainty surrounding the country’s still‑forming AI regulatory framework.

The project, announced by OpenAI in September, was meant to have seen the AI giant partner with NVIDIA and Nscale to deploy up to 8,000 GPUs in Q1 2026, with the potential to scale to 31,000 GPUs, with the deal labelled a critical part of the UK’s AI Opportunities Action Plan.   

In a statement, the tech firm said that while it “continues to explore Stargate UK,” its plans for major investment require “the right conditions” to enable long-term infrastructure investment, including predictable regulation and lower energy costs.

While OpenAI’s hesitancy comes amid spiking global energy prices, recent figures show that electricity prices for UK industrial users were almost 50% higher than in France and Germany and four times higher than in the US last year.

Although the government is doing its best to insulate large, energy-intensive firms from spiralling costs, including finalising the British Industrial Competitiveness Scheme (BICS), which will target 7,000 firms for up to 25% electricity bill reductions from next year, these efforts are at the mercy of the wider market, with costs likely to get worse following ongoing shocks from the conflict in Iran.

More notable is OpenAI’s reference to tech regulation, an area where the UK Government has full domestic authority, despite the continued influence of global market pressures.

Keir Starmer’s government has faced criticism for flip-flopping on key AI policies, most recently by backtracking on plans to allow AI companies to use copyrighted creative works to train their models by default after harsh blowback from the industry.

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While the prime minister said back in 2024 that Labour favoured narrow legislation to regulate the developers of the most powerful AI models, no such standalone laws have yet materialised, with the government instead delivering piecemeal legislation like that through the Data (Use and Access) Act 2025, leaving mega AI firms like OpenAI in regulatory limbo.     

Ultimately, OpenAI’s shelving of Stargate UK will hit not just the government’s wider AI action plan, but also its ambition to secure sovereign British compute power, leaving a hole in the UK’s tech landscape.

A Department for Science, Innovation and Technology spokesperson told Politico: “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.”