Microsoft has withdrawn from a planned AI datacentre project in Loughton, Essex, leaving the British infrastructure company Nscale without its only publicly announced customer for the site. The Guardian reports that Microsoft, which had been expected to serve as the anchor tenant, informed Nscale it was ending the agreement amid concerns over power supply.
The Loughton development had been described by Keir Starmer’s government as the ‘largest UK sovereign AI datacentre’ when it was announced as part of the UK’s AI strategy in 2025. Power supply problems had already emerged as an obstacle, with authorities reportedly warning that a grid connection for the site could be delayed until the 2030s, according to Yahoo Finance. The site, it emerged in March, remained an operational scaffolding yard.
What the departure means for Nscale
Microsoft’s exit, first reported by the Telegraph, strips Nscale of its sole confirmed customer for the Essex project. The loss of the anchor tenant puts pressure on Nscale’s reported plans to list on Wall Street in 2026 at a potential valuation of US$35bn (£26bn). Nscale is backed by technology companies including Nvidia and has marketed itself as Britain’s sovereign datacentre provider.
The company’s wider position has come under scrutiny on other fronts. Its flagship datacentre in Norway is running roughly half a year late, with just 6.4 megawatts of a planned 30-megawatt capacity up and running, Yahoo Finance reported. Microsoft is understood to remain a partner on that Norwegian project.
As background, Nscale announced in October 2025 that it had signed an expanded deal with Microsoft covering approximately 200,000 NVIDIA GB300 GPUs of AI infrastructure across Europe and the US, described at the time as one of the largest AI infrastructure contracts ever signed, according to a press release on Nscale’s website.
Nscale’s response
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. 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 at the time of publication, according to Yahoo Finance. Nscale’s position, as set out by its spokesperson, is that it is actively seeking alternative power solutions for Loughton while pursuing additional UK sites.