Microsoft walks away from Nscale's Loughton data centre deal

Microsoft has pulled out of a deal to lease the entire 50MW capacity of Nscale's planned data centre in Loughton, Essex, after grid connection delays pushed the site's power supply from the end of 2026 into the following decade.

The Telegraph first reported the withdrawal. The US technology giant had intended to deploy an AI supercomputer at the site equipped with roughly 23,000 Nvidia GB300 chips. Nscale announced the Loughton development last year under a £2.5 billion investment commitment, part of a broader UK drive to attract AI infrastructure spending.

Nscale moved quickly to contain the damage. An Nscale spokesperson told Reuters: "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts." The two companies continue to work together on projects in Norway, Portugal and the US.

The company added that it remained "committed to both the Loughton project and the UK" and was exploring alternative power sources, according to reports.

What does this change for UK AI plans?

The setback revives questions about the delivery of the UK's headline AI investment pledges. A Guardian investigation in March raised concerns over the status of several major announced projects, Loughton among them. Reporters visiting the site in February found it still in use as a scaffolding yard.

Nscale subsequently said it had purchased the site in September 2025 and was targeting delivery in 2027. The grid timeline now stretches well beyond that date, leaving the project's schedule uncertain even with alternative power sources under consideration.

Power availability has become a structural constraint for UK data centre development. Growing demand from AI workloads is putting pressure on grid infrastructure, and Loughton is not an isolated case: the delay affecting the Essex site is, in Nscale's words, a "London-wide grid issue".

Nscale's IPO runway

The commercial context matters. Nscale, which is backed by Nvidia, filed for a US IPO last month and raised $3.4 billion in pre-IPO financing. Its prospectus names Microsoft and Anthropic as expected major customers.

Losing the anchor tenant at Loughton does not break the Microsoft relationship, as the Norway, Portugal and US collaboration shows. But it removes one of the most visible proof points behind the UK's AI infrastructure pitch, and it does so at a moment when Nscale is asking public-market investors to underwrite its buildout.

For grid operators and policymakers, the message is blunt. Without faster connections, announced capacity does not become operational capacity. Nscale says it is still targeting Loughton delivery, and its exploration of alternative power sources will determine whether the 2027 date survives contact with the grid queue.