Microsoft has withdrawn from the UK’s largest AI data center project in Loughton, Essex over concerns about electricity supplies. Nscale, a British vertically integrated, full-stack AI infrastructure and neocloud company remains committed to the facility’s development which was announced in 2025, and originally expected to be completed in 2027. The project was backed by the UK government as a major part of its plans to expand the UK’s artificial intelligence infrastructure.
Microsoft had been expected to fund a supercomputer at the site and act as its anchor customer. Its withdrawal leaves Nscale without an official public customer for the Essex facility. The setback follows reports that electricity supply problems would delay the project’s connection to the national grid as reported by the BBC.
“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 told the BBC. “Our relationship with Microsoft remains strong and long-term. This unfortunate London-wide grid issue has no impact on our other contracts.”
Microsoft declined to comment on the partnership termination.
Nscale is also reportedly preparing for a potential New York stock market listing this year, with a possible valuation of £ 26 billion (US$ 35 billion). Delays to major projects and the loss of a significant customer could complicate those plans. Microsoft’s withdrawal could create further uncertainty around Nscale’s expansion plans and attract greater investor scrutiny ahead of its planned US initial public offer (IPO) on the New York stock market listing according to the Guardian.
The two companies continue to work together on projects in Norway, Portugal and the United States. The withdrawal raises questions about the project’s delivery and Nscale’s wider expansion plans, supported by Nvidia, is among the businesses selected to support the government’s ambition to establish domestic AI computing capacity.