BP exits Teesside hydrogen scheme amid data centre dispute
BP has withdrawn from plans to build H2Teesside after a protracted dispute over whether the Redcar site should instead be used for a large data centre, a move that has been welcomed by Tees Valley Mayor Ben Houchen.
The energy group pulled out before a government decision, which was expected this week, on whether its hydrogen energy project at Teesworks could proceed.
The company cited a “material change in circumstances” relating to the land, pointing specifically to a planning application for a data centre submitted by landowners South Tees Group.
H2Teesside, for which BP began seeking a development consent order in March 2024 and submitted plans for in May that year, would have been eligible for compulsory purchase powers had the government granted approval on Thursday.
BP said the development had been expected to employ a “peak construction workforce of 1,300 jobs”.
However, Teesworks Ltd – part of STG – opposed the hydrogen plans, and in August secured permission from Redcar and Cleveland Borough Council to build a 5m sq ft AI data centre on the same land.
BP had previously said it was open to discussions that would enable both developments to co-exist, but the planning conflict has ultimately prompted its withdrawal.
Tees Valley Mayor Ben Houchen has welcomed the move, arguing it would advance the region’s ambitions in the technology sector.
He said the decision cleared the way for the AI data centre, which he claimed would “create more long-term jobs, attract more investment and deliver greater future-proof growth”.
Houchen added: “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.”
Limited land and high investor interest on the former steelworks site meant the authority had a responsibility to ensure the “biggest possible benefit for local people.” He said: “This is absolutely the right move for Teesside.”
BP’s hydrogen scheme had been promoted as a cornerstone of Teesside’s ambitions to become a green energy trailblazer.
The company will continue to be involved with the £833m Net Zero Teesside project, which will be constructed by Balfour Beatty, a planned gas-fired power station with carbon capture and storage capability.
Teesworks is operated as a joint venture between the publicly owned and funded South Tees Development Corporation, part of the Tees Valley Combined Authority, and Teesside businessmen Martin Corney and Chris Musgrave.
Their shareholding rose from 50% to 90% in 2021, with the remaining 10% held in public ownership.
A BP spokesperson said: “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.”
