Microsoft Exits Nscale’s Loughton AI Data Centre Project
Microsoft has withdrawn from Nscale’s planned AI datacentre in Loughton, Essex, where it was expected to be the anchor tenant. The project has faced…
Microsoft pulls datacentre project plans in Loughton, Essex, after withdrawing from an agreement with Nscale, putting the planned AI facility’s anchor tenancy in doubt. The project, which was expected to open next year, has faced concerns over electricity supply.
Nscale said it remains committed to the site and is exploring alternative power sources. The withdrawal leaves the company without a publicly announced customer for its Essex datacentre, according to The Guardian, which reported the development on Sunday.
Power supply puts project timeline under pressure
The British company’s proposed facility was heralded by UK ministers as the country’s largest AI datacentre when it was announced in 2025. The government highlighted the Loughton project while announcing its AI strategy that year, describing it as the “largest UK sovereign AI datacentre”.
But power availability has become a central obstacle. The Guardian reported that Microsoft’s exit follows concerns that the project would face a lengthy wait before coming online because of supply problems. A month earlier, the newspaper had reported delays linked to the power connection.
The project has faced other questions, too. The Guardian reported in March that the proposed site was still an operational scaffolding yard. The facility was planned to open next year, but the electricity constraints have cast doubt on when it could begin operating.
For the UK’s AI ambitions, the immediate issue is whether a flagship infrastructure project can secure enough power to serve its intended role. Datacentres support AI services such as chatbots, and a delayed site could leave the planned facility unable to provide capacity on its announced timeline. The reporting does not establish what alternative power sources Nscale may use or when a grid connection could be available.
Nscale says other Microsoft contracts remain intact
Microsoft was expected to be the anchor tenant and one of the largest planned customers for the Essex facility. The Guardian said the company remains involved in a separate Nscale project in Norway, while the withdrawal concerns the Loughton agreement.
An Nscale spokesperson said: “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 spokesperson added: “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.” Microsoft had not publicly commented on the reported withdrawal, according to the reporting from Yahoo Finance Australia.
Nscale is backed by technology companies including Nvidia and has presented itself as a UK provider of sovereign datacentre capacity. The Guardian reported that losing the expected anchor tenant could undermine the company’s ambition to float on Wall Street this year, at a potential valuation of $35bn (£26bn).
That potential listing is not confirmed as a completed transaction. The immediate question for the Essex project is whether Nscale can find replacement customers and secure a workable power supply after Microsoft’s exit.
Nscale says it is exploring alternative power sources for Loughton.
Source: theguardian.com
