OpenAI halts UK stargate project amid regulatory and energy price concerns

In this articleOpenAI's Stargate project in the U.K. is being paused, with the company pointing towards the cost of energy and the country's regulatory environment. The U.S. AI startup announced plans for the major infrastructure project in September, saying it would deploy up to 8,000 GPUs in partnership with Nscale and Nvidia. Politico first reported on Wednesday that the project was on hold."We continue to explore Stargate U.K. and will move forward when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment," an OpenAI spokesperson told CNBC in a statement. Industrial energy prices in the U.K. are among the highest in the world. Critics of the U.K.'s AI infrastructure buildout previously told CNBC the high cost of energy and delays in accessing the national grid were key stumbling blocks. Lawmakers in the U.K are also looking to develop new regulations around how AI models use copyrighted work. Nscale declined to comment when approached by CNBC about the project being paused. Nvidia has been approached for comment. OpenAI and Nscale are still in discussions about the project in the future, a source with direct knowledge of the matter told CNBC.When announced, Stargate UK was seen as a driver of the country's AI strategy. It followed OpenAI's signing of a Memorandum of Understanding (MOU) with the U.K. government in July 2025. The project was expected to be based across a number of sites, including Cobalt Park, which will form part of the newly designated AI Growth Zone in the North East, an OpenAI statement at the time read.The company was aiming to explore offtake of up to 8,000 GPUs in the first quarter of 2026, with the potential to scale to 31,000 GPUs over time. That capacity would enable OpenAI's models to run on local computing power for specialist use cases like critical public services, regulated industries like finance and national security partnerships. The U.K. was set to delay changes to its copyright rules that would've made it easier for AI companies to use media content following backlash from the creative sector in the country, the Financial Times reported in March. Later that month, the government published a report on copyright and AI, which stated that the majority of respondents to its public consultation "rejected the originally preferred proposal in our consultation: a broad exception with opt-out.""Many responses were from the creative industries, who were concerned a broad exception would allow generative AI to learn from their works, without compensation, and in direct competition to them," the report reads."We see huge potential for the U.K.'s AI future," the OpenAI spokesperson added. "London is home to our largest international research hub, and we support the Government's ambition to be an AI leader.""In the meantime, we are investing in talent and expanding our local presence, while also delivering on the commitments under our MOU with the Government to adopt frontier AI in UK public services," the statement continued.— CNBC's Arjun Kharpal also contributed to this report. Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2026 Versant Media, LLC.

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