The Pulse
Microsoft exits Nscale’s Essex AI data centre deal
Microsoft has withdrawn from its planned role as anchor customer at Nscale’s Loughton AI data centre in Essex, citing power supply concerns. Nscale says it remains committed to the site and is exploring alternative power sources after a gri
AI.info Team · Written with AI ·
Microsoft is leaving its planned role as anchor customer at Nscale’s Loughton AI data centre, while Nscale says it still intends to build the facility. The split, reported on October 18, follows warnings that the site may not receive enough grid power until the early to mid-2030s—years beyond the project’s expected opening.
The withdrawal removes the Essex project’s only publicly announced customer. Nscale says the power problem is specific to the London-area grid and will not affect its other Microsoft contracts, including a separate project in Norway.
Grid delays put the Loughton plan under pressure
Announced in 2025, the Loughton development was presented by ministers as the UK’s largest sovereign AI data centre. Nscale had planned to open it in 2027. Microsoft was among its largest planned customers and expected to anchor the project.
UK Power Networks, which owns and maintains the electricity grid across London and south-east England, told Nscale it could not supply enough power to the site until the early to mid-2030s, according to The Guardian. Nscale is investigating alternative power sources and whether it can accelerate the grid connection.
The timing leaves a substantial gap between the site’s intended opening and the grid supply Nscale was told to expect. The project’s immediate challenge is not only finding a replacement customer, but securing enough power to operate the facility.
Nscale says the site is still on
An Nscale spokesperson said the company remains committed to Loughton and is considering other UK expansion sites. The spokesperson also said: “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.”
The statement draws a line between the Essex agreement and Nscale’s broader relationship with Microsoft. The Guardian says Microsoft remains involved in another Nscale project in Norway; the company’s public commitment to Loughton does not, by itself, settle how or when the site could be powered.
From government showcase to execution test
The UK government highlighted Loughton in its 2025 AI strategy, calling it the “largest UK sovereign AI datacentre.” The project’s progress has since faced questions: a Guardian report in March found the site was still being used as a scaffolding yard. Nscale has since cleared the site, but the power connection remains a major obstacle.
The loss of Microsoft also raises the stakes for Nscale’s plans to float on Wall Street this year. The Guardian reported a potential valuation of $35bn (£26bn), while warning that losing the planned anchor tenant could undermine the listing effort.
For now, Nscale says it is pursuing alternatives rather than abandoning Loughton. The site’s next test is concrete: whether the company can find another way to supply the electricity required for the data centre.