Microsoft has reportedly ended its agreement with Nscale for a planned AI datacenter in Loughton, Essex. The Telegraph first reported the withdrawal on Sunday. The site was meant to start operating in 2027, but reports suggest it may not get enough grid power until the early to mid-2030s.
Microsoft was expected to be the anchor customer for the facility, which Nscale pitched as the UK's largest sovereign AI datacenter. No other customer has been publicly announced for the site. Nscale says the project is still going ahead.
Announced in September 2025, the plan called for 23,040 Nvidia GB300 GPUs in a 50MW facility that could expand to 90MW. Microsoft intended to use the computing capacity for Azure, with the first chips expected in early 2027. The UK government included the project in Microsoft's £22 billion UK investment announcement that month.
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The Guardian reported last month that UK Power Networks had warned Nscale the required grid capacity might not be available until the 2030s. UK Power Networks told The Register it could not discuss individual connections because of obligations under Section 105 of the Utilities Act. It said many datacenters can connect to its distribution network but are waiting for work on the national transmission network, which it does not own.
The Loughton site was still being used as a scaffolding yard when its status came to light in March. Nscale has since cleared the land. It told The Register that it remained committed to Loughton and the UK, and that the grid issue did not affect its other Microsoft contracts.
Connection demand has risen across the UK
The power constraint extends beyond Essex. Earlier this year, Ofgem proposed charging datacenter developers for connection requests to discourage speculative projects from filling the queue. Demand for new connections had climbed from 41GW to 125GW in less than a year, with datacenters accounting for at least 80GW.
Some UK datacenter developers have turned to gas-powered generation while waiting for grid connections. Others have faced opposition from nearby residents. At a public meeting in July, people living near Google's Waltham Cross facility complained about noise, lighting and poor consultation. In the US, concerns about electricity costs and environmental effects have also weighed on public attitudes toward new datacenters.
Nscale says it is exploring alternative power sources for Loughton as well as other expansion sites in the UK.
