Microsoft pulls out of Britain's flagship AI datacentre in Essex over power supply worries
Microsoft, expected to be the anchor tenant, has ended its agreement for Nscale's planned AI datacentre at Loughton, once billed by ministers as the UK's largest sovereign AI site. The project already faced a long wait for grid power.
One of the British government's showcase artificial intelligence projects has suffered a fresh blow after Microsoft withdrew from a huge datacentre planned in Essex, citing concerns about power supplies.
The site at Loughton is being developed by the British company Nscale, which is backed by tech firms including Nvidia. When it was announced in 2025, ministers presented it as the country's largest sovereign AI datacentre and highlighted it as part of the UK's national AI strategy. It was due to open next year.
Microsoft was the project's only publicly announced customer and had been expected to act as its anchor tenant. According to The Guardian, which followed an initial report in The Telegraph, the company has now told Nscale it is ending the agreement. Microsoft is understood to remain involved in a separate Nscale project in Norway.
The decision follows reports a month ago that grid connection problems meant the Loughton site faced a lengthy wait before it could come online. Questions had already been raised in March, when the Guardian reported that the plot was still being used as a working scaffolding yard.
The setback is significant for Nscale, which has positioned itself as Britain's home-grown datacentre provider and has been reported to be aiming for a listing on Wall Street at a possible valuation of around $35bn. Losing its main tenant in Essex could make that pitch harder.
An Nscale spokesperson said the company remains committed to Loughton and to the UK, is looking at alternative power sources for the site as well as other expansion locations, and described its relationship with Microsoft as strong and long-term. The company blamed what it called a London-wide grid issue and said its other contracts are unaffected.