Microsoft Exits UK Data Center Deal With Nscale After Power Grid Delays Push Connection to 2030s

Microsoft has pulled out of an agreement to anchor a major AI data center project in Loughton, Essex, after the site's developer, British infrastructure company Nscale, was told by UK Power Networks that electricity supply would not be available until the early to mid-2030s.

The Loughton facility was designed to house over 23,000 Nvidia GB300 GPUs, with Microsoft contracted to use 50 megawatts of the facility's computing capacity to support its Azure services in the UK. The project was initially announced in 2025 during a visit by then-U.S. President Donald Trump and was scheduled to open in 2027.

Despite the planned timeline, the site remained undeveloped as of early 2026, with reports noting the location was still serving as a scaffolding yard as late as March 2026. The power delay made the project's operational goals incompatible with the available infrastructure.

The withdrawal reflects a broader crisis in the UK energy sector. Approximately 315 data center projects, representing 73 gigawatts of demand, are currently waiting for grid connections across the country.

Microsoft said it remains committed to its broader partnership with Nscale on other digital infrastructure and AI projects globally. Nscale said its relationship with Microsoft remains strong and that the Loughton issue does not affect other ongoing contracts. The company is exploring alternative energy sources for the site.

The timing is difficult for Nscale, which filed for an initial public offering in the United States in September 2026. Microsoft was listed as a major customer in the company's prospectus, and the loss of this anchor commitment has drawn scrutiny from investors about Nscale's ability to deliver on contracted capacity.