OpenAI has officially paused its Stargate UK data centre project – part of the £31 billion US tech investment package announced last September with partners like Nvidia and Nscale – citing high energy costs and regulatory uncertainty as the deal-breakers.

This isn’t a vague rumour: OpenAI’s own statement is crystal clear. They’re still “exploring” the project (initially up to 8,000 Nvidia GPUs at sites like Cobalt Park in the North East, with potential to scale) but will only commit when “the right conditions such as regulation and the cost of energy enable long-term infrastructure investment.”

AI data centres are electricity guzzlers – think gigawatts for training and inference. UK industrial power prices are among the highest in the developed world (often cited as several times US levels), thanks to a grid strained by intermittent renewables, grid connection delays, and policy-driven costs.

AI data centres are electricity guzzlers – think gigawatts for training and inference. UK industrial power prices are among the highest in the developed world (often cited as several times US levels), thanks to a grid strained by intermittent renewables, grid connection delays, and policy-driven costs.

Labour sold the September deal (timed with Trump’s UK visit) as proof Britain could become an “AI superpower.” Starmer’s team hyped it hard. Now it’s unravelling on their watch.

Ed Miliband (Energy Secretary, long nicknamed “Red Ed” for his green-left stance) leads the push for rapid Net Zero by 2030, emphasizing renewables like wind and solar while winding down North Sea oil and gas.

Critics argue this has contributed to higher costs through:

• Heavy subsidies and grid integration challenges for intermittent sources.
• Regulatory hurdles and planning delays.
• A reluctance to prioritize dispatchable baseload power (gas, nuclear, or otherwise) that AI facilities need for 24/7 operation.

Labour came into office promising to make Britain an “AI superpower,” with Keir Starmer highlighting tech investment and growth.

Yet this pause lands as a direct contradiction—top-tier AI talent and research exist in the UK, but energy realities are pushing capital elsewhere (or delaying it). Conservatives and other critics have been quick to link it to Miliband’s policies, calling the Net Zero timeline “suicidal” for energy-intensive industries.

This fits a broader pattern: data centres globally are exploding in demand due to AI training and inference, but the UK’s energy system—already strained—faces questions about whether green targets can coexist with massive new electricity loads without price spikes or blackouts.

Miliband has acknowledged data centre demand adds “uncertainty” to net-zero modelling, which hasn’t reassured investors seeking predictability.

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Red Ed strikes again! Miliband blamed as OpenAI pulls out of £31bn investment plans over high energy costs in huge blow to Labour’s bid to make Britain an ‘AI superpower’

Labour’s Ed Miliband was being blamed today after OpenAI – the tech giant behind ChatGPT – put its UK data centre on hold.

By GREG HEFFER, POLITICAL CORRESPONDENT

The California-based firm pointed to high energy costs and regulatory uncertainty for its decision to pause its Stargate UK project. The Daily Mail Online has the story.

Stargate UK was announced in September last year as part of a combined £31billion investment in Britain by US tech firms.

The announcement of the investment, as well as a UK-US tech prosperity deal, was made during US President Donald Trump‘s state visit to Britain.

Stargate UK is a data centre planned for the North East in partnership with British firm Nscale.

The delay to the project is a huge blow to Prime Minister Keir Starmer‘s bid to turn the UK into ‘one of the great AI superpowers’, as Labour scrambles for economic growth.

The Tories heaped blame on the ‘Net Zero’ agenda of Mr Miliband, the Energy Secretary, for harming Britain’s AI ambitions.

Senior Conservative MP Andrew Griffith, the shadow business secretary, said: ‘Ed Miliband’s suicidal energy policy has just cost us another huge investment.

‘The UK has top AI talent and labs but huge energy costs because of Labour’s mad Net Zero agenda.

‘If Labour let us fall behind on AI, British businesses will lose out to competitors.’

Mel Stride, the shadow chancellor, said OpenAI’s decision was a ‘damning verdict’ on Chancellor Rachel Reeves’ ‘economic mismanagement’.

‘Britain should be leading the AI revolution,’ Sir Mel said.

‘Instead, Labour are delivering high costs and lost opportunity.

‘The message to investors is clear: under Keir Starmer, Britain isn’t open for business.

‘We need cheaper energy, smarter regulation, and a government that actually understands how to attract jobs and investment.’

Read the full story here.