What happened
The Guardian reports that Microsoft has ended its agreement to serve as an anchor tenant for Nscale’s planned AI datacentre in Loughton, Essex. The project, announced in 2025 as the UK’s largest sovereign AI datacentre, was already facing delays because of power-supply problems. Nscale says it remains committed to the site and is exploring alternative power sources.
The Guardian reports that Microsoft informed Nscale it was pulling out of an agreement for the Loughton facility, where it had been expected to act as the anchor tenant. The report says the decision followed concerns about power supplies and came after it emerged that grid constraints could leave the project waiting a lengthy period before coming online.
The planned site was announced in 2025 and promoted by the UK government as the country’s largest sovereign AI datacentre. The Guardian also reports that doubts had already emerged because the Loughton location remained an operational scaffolding yard when the newspaper examined it in March.
Nscale told the Guardian that it remains committed to Loughton and the UK and is exploring alternative power sources and other UK sites. The report says Microsoft remains involved in a separate Nscale project in Norway. No access model, customer pricing or public timetable for using the Essex facility is documented in the source.
Source details: theguardian.com ↗
Why it matters
The withdrawal is a significant setback for UK AI infrastructure because the project was presented by ministers as a major national computing facility and has now lost its only publicly announced customer. The episode also highlights how electricity availability can constrain AI datacentre expansion even when investment, government support and computing demand are present. The Guardian’s report does not independently establish Microsoft’s contractual terms, the precise power shortfall or whether another customer will replace it.
AI datacentres require large amounts of reliable electricity, so the reported withdrawal illustrates a practical infrastructure bottleneck for expanding AI capacity. A project can have government backing and major technology-company interest yet still face delays if grid access is unavailable.
The loss of Microsoft removes the only publicly announced customer for the Essex site, according to the Guardian. That may weaken Nscale’s commercial position and its ambition to pursue a Wall Street listing at a reported valuation of $35bn, although the report does not establish how investors or other customers have responded.
The report’s claims are based on Guardian reporting, including information first reported by the Telegraph, and a statement from Nscale. A public Microsoft confirmation, the agreement’s financial terms and the exact cause and duration of the power delay are not provided here.
Interactive Mechanism: How It Actually Works
Explore the underlying technology behind this development interactively.
A route planner searches possible journeys using explicit rules. What does this illustrate about AI?
What to watch next
Watch for a public statement from Microsoft, a revised construction or launch timetable, and evidence that Nscale has secured alternative power or replacement tenants. The project’s effect on Nscale’s planned Wall Street flotation and reported valuation is also uncertain. Microsoft’s continued involvement in Nscale’s separate Norway project should not be treated as confirmation that the Essex facility will proceed.
Microsoft’s public explanation, if released, could clarify whether the withdrawal is final, conditional or limited to the Essex project. The source provides no details about termination terms or financial consequences.
Nscale’s proposed alternative power arrangements and any updated construction schedule will indicate whether the project remains viable. A replacement anchor tenant would materially change the outlook, but none is identified in the report.
The reported delay should not be generalized to all UK AI datacentre projects. The source describes a London-area grid issue affecting this project and says Microsoft remains on board for Nscale’s Norway development.