BP pulls out of Teesside hydrogen scheme due to clash with data centre plans

Energy company BP has withdrawn from plans for a hydrogen project at the vast Teesworks site, potentially paving the way for a data centre to be constructed in its place. The area near Redcar had been embroiled in a tug-of-war recently due to competing national interests - clean energy production and support for AI development - both vying for the same land for their projects.

BP has now officially communicated to the Government its decision to abandon its plans, citing "material changes" at Teesworks as the reason it no longer intends to proceed with the H2Teesside scheme. However, it maintains its commitment to other energy initiatives on Teesside.

Planning permission was granted in August for a data centre at Teesworks. The application was submitted by Teesworks Ltd, a collaboration between the South Tees Development Corporation and private developers.

Ben Houchen, the mayor of Tees Valley, had hoped that the region would be declared as the Government's inaugural AI Growth Zone, but this honour was instead bestowed upon an area near Newcastle. Other AI growth zones have since been announced across the country, although it is thought that the Government still supports the creation of one on Teesside.

Internet titan Google has also been associated with the project, though it declined to comment on these reports, reports Teesside Live.

A BP spokesman said: "Due to material changes in circumstances on the Teesworks site, including a planning application being granted locally for a data centre on the same piece of land, we have taken the decision not to progress the development of H2Teesside and have withdrawn our Development Consent Order application for the project.

"We continue to move forward with other projects on Teesside, including our investments in Net Zero Teesside Power and the Northern Endurance Partnership, and remain an active partner in the region."

A correspondence from H2 Teesside, part of BP, to the Department for Energy Security and Net Zero stated the rival proposals for a data centre and a hydrogen facility were "incompatible on the same piece of land," noting that "we recognise that there may be other economic opportunities for the Teesworks site which could advance at pace."

BP had earlier stated that the scheme could fulfil a "critical role in decarbonising industry on Teesside, helping to transform the region into a leading hydrogen hub and kickstart the UK's low carbon hydrogen economy."

The company had indicated that the development could support and preserve "hundreds of jobs", though exact numbers were not provided.

Reacting to the announcement, Lord Houchen said: "Today's decision clears the way for what could be the biggest private investment Teesside has ever seen - bringing thousands of high-quality jobs and putting us right at the heart of the UK's fast-growing AI and tech industry. BP's hydrogen project faced a number of challenges, and while I know this won't have been an easy decision, I welcome their pragmatism. We'll continue working closely with BP to deliver their world-first £4bn NZT carbon capture scheme - a critical part of Teesside's industrial future.

"Land on the former steelworks site is limited, and investor interest is high. We've got a responsibility to make sure it's used to deliver the biggest possible benefit for local people. A cutting-edge data centre will create more long-term jobs, attract more investment and deliver greater future-proof growth than any alternative. This is absolutely the right move for Teesside.

"Now we have clarity, we can get on and deliver. From ICI to AI, Teesside powered the first Industrial Revolution, and now we've got the green light to lead the next one."