Microsoft has withdrawn from a major AI datacentre project in Essex due to concerns over power supply reliability. The project, led by British company Nscale and backed by the UK government, was set to be the country’s largest AI datacentre when announced in 2025. Microsoft, which was expected to be the anchor tenant, has now pulled out of the agreement, leaving Nscale without its only publicly announced customer for the site.
The Loughton project has faced multiple setbacks, including delays caused by power supply issues. UK Power Networks informed Nscale that sufficient electricity would not be available until the early to mid-2030s. Despite these challenges, Nscale remains committed to the project and is exploring alternative power sources, including onsite generation.
The setback could impact Nscale’s plans to float on Wall Street this year with a potential valuation of $35bn (£26bn). The company, which is backed by tech giants like Nvidia, has positioned itself as Britain’s ‘sovereign’ datacentre provider. However, the loss of Microsoft as a customer raises questions about its ability to meet its ambitious goals.
Nscale’s relationship with Microsoft remains strong, and the company is also investigating other expansion sites in the UK. The project is part of the UK government’s broader strategy to harness AI technology, with investments in the sector contributing to the country’s economic growth despite global uncertainties.