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# Microsoft Pulls Out of Nscale's Planned AI Data Center in Essex
- URL: https://digirolla.com/microsoft-pulls-out-of-nscales-planned-ai-data-center-in-essex/
- Published: 2026-10-19T07:07:59.000Z
- Updated: 2026-10-19T07:07:59.000Z
- Description: Microsoft has ended its agreement for Nscale's Loughton, Essex site, once billed as the UK's largest AI supercomputer. Reports say the grid can't power it until the 2030s.
- Author: Digirolla
- Tags: Business

One of the UK's flagship AI infrastructure projects has lost its anchor customer. Microsoft has terminated its agreement for a data center that British AI cloud provider **Nscale** is developing in **Loughton, Essex**, the Telegraph reported on Sunday, October 18\. Reuters and the Guardian followed with their own reporting.

## What happened

According to Reuters, the Telegraph did not say why Microsoft withdrew, and Microsoft declined Reuters' request for comment. The Telegraph reported that Nscale had faced repeated delays with the project. It also reported that national grid officials had told Nscale they did not expect to supply power to the site until the 2030s.

The Guardian adds more detail on the power problem. It emerged earlier this month that UK Power Networks, which runs the electricity grid across London and the south-east of England, had told Nscale it could not supply enough power to the Loughton site until the early to mid-2030s. The paper says Microsoft was the only publicly announced customer for the Essex data center, and that it understands Microsoft is still on board for a separate Nscale project in Norway.

## Nscale's response

An Nscale spokesperson said in a statement:

> "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."

The Guardian reports that Nscale has cleared the site, which was still an operating scaffolding yard in March 2026\. It is looking at whether it can generate power on site and speed up its grid connection.

## What Loughton was supposed to be

The Guardian says the data center had been planned to open next year. It was part of what Microsoft called its largest financial commitment ever in the UK: on September 16, 2025, Microsoft announced a **$30 billion** investment in the UK from 2025 through 2028, including $15 billion in capital spending. As part of that, it said it would build the country's largest supercomputer, with more than 23,000 NVIDIA GPUs, in partnership with Nscale.

Nscale described the Loughton AI Campus as a 50MW facility, scalable to 90MW, that would house about 23,000 NVIDIA GB300 GPUs from the first quarter of 2027 to power Microsoft Azure services. The UK government called it the "largest UK sovereign AI datacentre," according to the Guardian.

## The wider Microsoft–Nscale relationship

Loughton was one part of a much larger deal. In October 2025, Nscale announced an expanded contract with Microsoft for about 200,000 NVIDIA GB300 GPUs across Europe and the U.S., including:

- About 104,000 GPUs at a roughly 240MW campus in Texas, with delivery starting in the third quarter of 2026
- About 12,600 GPUs at the Start Campus data center in Sines, Portugal
- About 52,000 GPUs at a campus in Narvik, Norway, through Nscale's joint venture with Aker

## Why the timing matters

Nscale filed for a U.S. initial public offering last month, according to Reuters, and its prospectus names Microsoft and Anthropic as expected major customers. Reuters says the Nvidia-backed company has grown from $100 million to more than $103 billion in total contracted value in two and a half years. The Guardian reports that Nscale's hoped-for listing carries a potential valuation of $35 billion, and that losing the Loughton anchor tenant could undermine that ambition.

## Sources

- [Reuters via StreetInsider: Microsoft pulls out of UK data center deal with Nscale, Telegraph reports](https://www.streetinsider.com/Reuters/Microsoft+pulls+out+of+UK+data+center+deal+with+Nscale%2C+Telegraph+reports/27199314.html?ref=digirolla.com)
- [The Guardian: Microsoft pulls out of AI datacentre project in Essex over power supply concerns](https://www.theguardian.com/uk-news/2026/oct/18/microsoft-drops-huge-ai-datacentre-project-in-essex-over-power-supply-concerns?ref=digirolla.com)
- [The Telegraph: Microsoft axes AI deal in setback for UK data centre pioneer](https://www.telegraph.co.uk/business/2026/10/18/microsoft-axes-ai-deal-setback-uk-data-centre-pioneer/?ref=digirolla.com)
- [Microsoft: Microsoft invests $30 billion in UK to power AI future (Sept. 16, 2025)](https://blogs.microsoft.com/on-the-issues/2025/09/16/microsoft-30-billion-uk-ai-future/?ref=digirolla.com)
- [Nscale: Nscale contracts approximately 200,000 NVIDIA GB300 GPUs with Microsoft (Oct. 15, 2025)](https://www.nscale.com/press-releases/nscale-microsoft-2025?ref=digirolla.com)