Microsoft pulls out of Nscale's Loughton data centre – power not expected until the 2030s
Microsoft has withdrawn from its agreement to lease capacity at Nscale's data centre in Loughton, Essex, just weeks after promising that part of its $30 billion of UK investments would fund the supercomputer at the site.
Microsoft has withdrawn from the agreement to lease capacity at Nscale's data centre in Loughton, Essex, just weeks after promising that part of its $30 billion of UK investment would fund the supercomputer at the site. The backdrop is the power supply: according to The Telegraph, the authorities have told Nscale that electricity is not expected to be in place until the 2030s — against a planned power connection at the end of the year. The withdrawal hits the neocloud company Nscale in the middle of its run-up to a listing on the New York Stock Exchange, and is a concrete blow to Britain's AI-infrastructure ambitions.
What is confirmed
The Telegraph broke the news on Sunday 18 October 2026. On Monday 19 October, Microsoft confirmed the withdrawal to several media outlets. A company spokesperson told AFP that "this decision relates to a single site" and that the company remains "committed to our partnership with Nscale." Speaking to IT Pro, the spokesperson said: "We remain committed to our partnership with Nscale, including work to build robust digital infrastructure and support AI growth globally."
To BBC, Microsoft declined to comment further. Nscale told the BBC: "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." According to Bloomberg, the company also said its relationship with Microsoft remains good.
None of the sources — the Telegraph, Wall Street Journal, BBC, AFP or IT Pro — has given a concrete reason from Microsoft itself for why it pulled out. The Telegraph gave no specific reason but reported that the site has battled a series of delays. The Wall Street Journal characterises the withdrawal as a result of power-supply problems, and Nscale points to challenges with the UK power grid. Microsoft has not itself confirmed any cause.
The deal as planned
Last year, Nscale bought a site in Loughton, just outside London, for its first UK data centre. Microsoft was to lease a 50-megawatt facility, scalable to 90 MW, initially housing around 23,000 Nvidia GB300 chips (IT Pro gives the figure as 23,040 — likely the same number rounded differently) to power Microsoft's Azure services. The facility was expected to create 250 permanent jobs, according to IT Pro.
The deal was announced during President Trump's state visit to the UK last year, and Keir Starmer described the Loughton facility, according to AFP, as "the largest UK sovereign AI data centre." As recently as last month, Microsoft announced that part of the $30 billion (roughly £22 billion) it is investing in the UK would be used to finance the Loughton supercomputer, according to the BBC.
Instead of power at the end of the year, the picture is now completely different: according to The Telegraph, the facility's power supply is not expected until the 2030s. These details rest on the secondary sources cited above, but are repeated by several independent outlets.
Why the power is not arriving
The grid bottleneck appears to sit at a level above the local distribution network. UK Power Networks, which does not disclose information about individual connections, said on Monday to AFP: "Many data centres, whilst they can connect to our distribution network, are awaiting works on the national transmission network, which we do not own."
In other words: the company that owns the local grid in Essex cannot deliver the power a 50-megawatt facility needs, because expansion of the main transmission network is behind schedule. This is what makes the story more than one company's misfortune — it points to a structural constraint in UK AI infrastructure that capital and GPU deliveries cannot solve.
It is not the first time a major player has withdrawn from an Nscale project in the UK citing energy conditions. Earlier this year, OpenAI withdrew from the partnership with Nscale and Nvidia on a British version of Stargate, the large AI-infrastructure initiative, according to AFP citing British media — citing high energy costs and regulatory uncertainty.
What Nscale stands to lose
Microsoft is the only customer that has signed for the Loughton facility, according to IT Pro. The concentration of Nscale's revenue around a few giant customers is documented in the company's listing documents — but the figures in circulation are partly contradictory:
- According to Bloomberg, citing Nscale's listing documents, Microsoft and Anthropic together account for around 85 per cent of the company's contracts.
- According to The Telegraph, as reported by Gizmodo, Microsoft alone accounts for 40 per cent of Nscale's contracted revenue, and is one of the company's two largest customers.
The two figures may measure different things — contracts versus revenue — but they cannot be reconciled from the available sources, and both should be read with that caveat. What remains clear in any case is that Nscale's revenue base is highly concentrated, and that one of the company's largest customers has now withdrawn from its first UK facility.
The IPO under pressure
The withdrawal comes at a vulnerable moment for Nscale. The company is preparing a listing on the New York Stock Exchange, with a reported target valuation of up to $35 billion. Earlier this year the company raised $2 billion at a valuation of $14.6 billion, and last month a further $3.36 billion in convertible notes arrived in a pre-IPO financing round led by the hedge fund Third Point, according to the Wall Street Journal. Convertible notes ahead of a listing are precisely a financing form for companies expecting to go public in the near future.
When the listing will actually happen is unclear: IT Pro writes that it is planned for "later this year," while Gizmodo says the exact timing is not known. IT Pro notes that Microsoft's withdrawal could have an effect on the listing — but none of the sources can say how big that effect will be.
What remains open
Several key questions are unanswered:
- Microsoft's reason. The company has not explained the withdrawal beyond saying it "relates to a single site." Whether the power delay alone was the trigger, or whether other factors played a role, is not known.
- Loughton's future. Nscale says the project is continuing and that it is exploring alternative power sources and other UK locations. How and when any alternative power solutions will materialise is unclear.
- The impact on the listing and other projects. There are reports that Nscale's facility in Norway is behind schedule, but this is unverified in the available sources, and the connection to the Loughton case is unclear.
The story is based entirely on the secondary sources cited above. But even with those caveats, the core is clear: on paper, a 50-megawatt AI data centre is a question of GPUs, contracts and capital — in practice, it was decided by something as mundane as a power grid that was not ready in time. For both Nscale and the UK's AI ambitions, that is the binding constraint that now has to be solved.