Microsoft exits UK's largest AI data centre over power grid delays to 2030s

Microsoft has withdrawn from its partnership with Nscale on the Loughton, Essex AI data centre project, citing concerns about power supply infrastructure. The facility, announced in 2025 as the UK's largest sovereign AI data centre and heralded by the government as a cornerstone of the country's AI strategy, was originally planned to open in 2026. However, UK Power Networks informed Nscale in October that the site would not receive sufficient grid power until the early to mid-2030s, forcing a significant operational delay.

Microsoft was positioned as Nscale's anchor tenant and had pledged to fund a supercomputer at the site as part of a £2 billion commitment announced last year. The company's exit represents a material blow to Nscale ahead of its planned initial public offering, for which the company is targeting a $35 billion valuation on Wall Street and seeking to raise up to $30 billion. IPO filings revealed that approximately 85% of Nscale's contracted business depends on Microsoft and AI company Anthropic. Microsoft confirmed it remains engaged with Nscale on separate projects in Norway, Portugal, and the United States.

Nscale stated it remains committed to the Loughton project and the UK market, and is exploring alternative power sources for the Essex site as well as other expansion locations within the UK. The company has cleared the scaffolding yard location and is investigating on-site power generation and potential acceleration of grid connection processes. The Loughton facility is expected to create 250 permanent jobs once operational. Nscale also noted that the London-wide grid issue does not affect its other contractual commitments. Microsoft declined to comment on the decision. The withdrawal underscores growing challenges in AI data centre development, as delays and infrastructure constraints mount across multiple projects in the sector.