Microsoft pulls data center deal as UK power delays loom
Has withdrawn from a planned data center deal with Nscale in Loughton, Essex, according to a Telegraph report cited by Bloomberg. The site has faced delays…
Microsoft pulls data center plans with Nscale in Loughton, Essex, according to a Telegraph report cited by Bloomberg, after delays and uncertainty over power supply threatened the project. Authorities told Nscale they do not expect electricity to reach the site until the 2030s, the report said.
The withdrawal puts pressure on Nscale as it pursues an initial public offering that could raise as much as $3 billion as soon as this month. Microsoft had been expected to become the anchor tenant at the company’s first British data center.
The power problem is central. Without a confirmed supply, the Essex site cannot proceed on the timetable originally envisaged, while Nscale must seek another way to serve the project. The company said it is looking at alternatives.
Power delays complicate Nscale’s IPO plans
The Telegraph did not give a specific reason for Microsoft’s decision, Bloomberg reported. It said the Loughton site had been contending with a series of delays, while local authorities did not expect power to be available until the 2030s.
Nscale said it remains committed to the project and to the UK. A company spokesman told the Telegraph: “We remain committed to both the Loughton project and the UK and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK.”
The spokesman also said Microsoft’s decision did not affect other contracts. “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.”
Microsoft did not comment to the Telegraph and did not immediately respond to a request for comment from Bloomberg outside usual business hours.
The disruption matters to Nscale because its contracts are concentrated among a small number of customers. According to an IPO filing, Microsoft and Anthropic account for around 85% of its contracts. Losing the planned anchor tenant at its first UK facility could complicate the company’s pitch to investors, although Nscale says its other contracts remain unaffected.
Nscale is a neocloud company, part of a group building large computing facilities for artificial intelligence workloads. These providers sit in the supply chain for the data center capacity that major technology companies are seeking to build. The Essex setback arrives as investors grow wary of the borrowing involved in financing that expansion, Bloomberg reported.
A second project is also behind schedule
Nscale’s flagship site in Norway is six months behind schedule, according to the report. The facility has 6.4 megawatts of its intended 30-megawatt capacity running.
The company’s IPO ambitions also face a less favorable market backdrop. Bloomberg reported that investors had become cautious about AI computing suppliers and the debt they and their customers are taking on to finance data center construction.
Another neocloud, CoreWeave, drew attention last week after its co-founder said the company was exploring borrowing in investment-grade debt markets. Its shares fell 25% over the week, their worst performance since November, according to Bloomberg. Australian data center company Firmus also scrapped IPO plans after the offering failed to attract enough support at the marketed share price.
Nscale has not announced a replacement tenant for the Essex facility. For now, its stated response is to explore alternative power sources while continuing to pursue expansion sites in the UK.
Source: finance.yahoo.com
