BP Cancels Major UK Hydrogen Project After Data Center Gains Approval on Same Site
December 3, 2025
In a significant development highlighting the competing demands for land and power between the energy transition and digital infrastructure sectors, BP has terminated its planned H2Teesside hydrogen production facility in northeast England. The decision follows the recent approval of a large-scale data center project at the same location, rendering the energy giant's ambitions "incompatible" with the site's new direction.
The conflict centers on the Teesworks regeneration site, a 4,500-acre former steelworks area outside Middlesbrough being developed by the public-private partnership Teesworks Ltd. In August, planning permission was granted for a substantial data center proposed by Teesworks in June. The facility is designed to span 500,000 square meters (5.38 million square feet) across six two-story data halls, though its ultimate capacity and end-user remain undisclosed.
This approval directly clashed with BP's H2Teesside project, a blue hydrogen initiative first announced in 2021. The plant was envisioned to have a capacity of up to 1.2 gigawatts, producing approximately 160,000 tons of low-carbon hydrogen annually while capturing around 2 million tons of CO2 for storage. In a letter to regulators, BP stated the data center's presence made its hydrogen project unviable. The company also cited deteriorating market demand for hydrogen, noting that several major potential customers had scaled back operations or delayed decarbonization plans, increasing the project's financial risk.
The cancellation is indicative of a broader strategic pivot by BP, which has been scaling back its low-carbon investments to refocus on its core oil and gas business. This move follows BP's decision in March to cancel its other Teesside hydrogen project, HyGreen Teesside, and its exit from other green hydrogen ventures globally. Despite scrapping the hydrogen plans, BP indicated it would continue developing a separate gas-fired power station with carbon capture and a regional carbon storage scheme in Teesside.
The episode underscores the intense pressure on strategic industrial land, particularly in the UK, where the government is actively promoting regions like Teesside as hubs for future industries. Reports in July suggested the UK government was eyeing the area to establish a second "AI Growth Zone," and Google was separately reported in September to be considering a data center development at the Teesworks site. The convergence of data center expansion and energy infrastructure projects is likely to create further complex planning decisions as both sectors vie for limited resources and grid connections.
Source: datacenterdynamics
BP Cancels Major UK Hydrogen Project After Data Center Gains Approval on Same Site
