Microsoft quits Nscale’s Essex AI data-center deal over power concerns

Nscale’s planned AI data center in Loughton, Essex, has lost its only publicly announced customer. Microsoft has withdrawn from its agreement over power-supply concerns, The Guardian reported on October 18. The departure removes the expected anchor tenant from a project the UK government promoted as its largest sovereign AI data center.

The immediate obstacle is electricity supply to the planned facility. It had been scheduled to open in 2027, but power problems had already put that timetable in doubt. In September, it emerged that the project faced a lengthy wait before it could begin operating.

Microsoft has now informed Nscale that it is pulling out of the agreement. The Telegraph first reported the withdrawal, according to The Guardian. That turns the power problem from a scheduling setback into the loss of a customer expected to play a central role at the site.

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.

Nscale spokesperson, quoted by The Guardian

Nscale characterized the difficulty as a London-wide grid issue, rather than a breakdown in its wider relationship with Microsoft. Its spokesperson said that relationship remained strong and long-term, and that the grid problem had no impact on the companies’ other contracts. Those assurances are Nscale’s account of the relationship.

Microsoft is understood to remain involved in another Nscale project in Norway, The Guardian reported. The distinction is important: the withdrawal concerns the agreement for Loughton, not an announced end to all work between the two companies.

Loughton also carries political significance. Keir Starmer’s government highlighted it in the UK’s 2025 AI strategy, describing the proposed facility as the country’s largest sovereign AI data center. That was a description of the planned development—not an operating facility. Nscale’s stated commitment keeps the project alive despite Microsoft’s departure.