Microsoft Pulls Out of UK AI Datacenter Over Power Supply
The company ended its deal with Nscale for the Loughton, Essex site after the local grid operator said it might not have enough electricity until the early 2030s.
Microsoft has pulled out of its deal to use a planned AI datacenter in Loughton, Essex, after the local grid operator said the site might not have enough electricity until the early to mid-2030s. The news was first reported by The Telegraph on Sunday and confirmed by The Guardian and the BBC.
Microsoft was to be the anchor tenant — the only publicly announced customer — of the site, which was expected to house 23,040 Nvidia chips and deliver 50 megawatts of computing capacity to Microsoft’s Azure cloud by early 2027.
The project was announced in 2025 and presented by ministers as the country’s largest sovereign AI datacenter. The government cited it when it launched the United Kingdom’s AI strategy that year.
UK Power Networks, which runs the grid across London and south-east England, told Nscale the Loughton site would have to wait until the early to mid-2030s for a full connection, the Guardian reported. The datacenter had been due to receive its power supply at the end of this year, according to the BBC.
Nscale, a British company spun out of bitcoin mining firm Arkon Energy and backed by Nvidia, said it remains committed to the Loughton project and the UK and is exploring alternative power sources for the site. “Our relationship with Microsoft remains strong and long-term,” a company spokesperson said, describing the problem as “a London-wide grid issue” that does not affect its other contracts. Microsoft declined to comment, according to the BBC.
Doubts about the project had been building. In March, the Guardian reported that the location was still an operating scaffolding yard, and in September the paper reported that grid constraints would mean a lengthy wait before the site could come online. Nscale filed for a US stock market listing in September with a possible valuation of $35 billion, according to Reuters, which counted Microsoft as one of the company’s two largest customers.
It is the latest sign that electricity, not chips, is the binding constraint on the AI buildout. Grid-connection requests from UK datacenters total about 73 gigawatts, according to CoinDesk. Tech stocks fell sharply last week as investors questioned how the industry will pay for the datacenters it is building.
