TL;DR

Microsoft has told Nscale it is ending its agreement to use the planned AI datacentre at Loughton in Essex, the Guardian reported on 18 October, with power supply given as the reason. Microsoft was among the biggest planned customers and was expected to anchor the site, so Nscale now has no publicly announced customer there. The Telegraph broke the story first.

A flagship project loses its tenant

Ministers presented Loughton as the country’s biggest AI datacentre when Nscale announced it in 2025, and Keir Starmer’s government used it in the launch of the UK’s AI strategy that year, calling it the “largest UK sovereign AI datacentre”. Opening was planned for 2027.

The scheme has had a difficult run. In March, Guardian reporters found the land still operating as a scaffolding business, and the paper says Microsoft’s decision comes a month after grid constraints were reported to mean a long delay before the site could go live, which we covered at the time.

Microsoft’s exit is limited to Essex. The Guardian understands Microsoft is still involved in a separate Nscale project in Norway.

What Nscale says

Nscale, whose backers include Nvidia, markets itself as Britain’s “sovereign” datacentre provider. Its spokesperson said the company “remain[s] committed to both the Loughton project and the UK”, is exploring other ways to power Loughton and at further UK expansion locations, and described the problem as a “London-wide grid issue” that does not affect its other contracts. It called its relationship with Microsoft “strong and long-term”.

The timing is awkward. Nscale has been aiming for a Wall Street listing in 2026 at a possible valuation of £26bn ($35bn), and losing the anchor tenant for its best-known UK site could weaken that case.

Looking forward

The question is whether Nscale can secure enough power to bring another customer to Loughton. In our view, the episode shows how grid capacity, not just land or chips, can decide whether a UK AI datacentre opens on schedule. A government announcement can name a site, but it cannot by itself connect it to the grid. For businesses relying on UK-hosted compute, the practical point is that announced capacity and usable capacity are not the same thing.