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Microsoft has pulled out of Nscale’s planned AI data centre at Loughton, Essex, the site that was meant to host what both companies called the UK’s largest supercomputer. The Telegraph first reported the move on 18 October. A Microsoft spokesperson confirmed it to Reuters the next day: “This decision relates to a single site.”
The Telegraph reported, according to Bloomberg, that Nscale had been told not to expect grid power at the site until the 2030s. Microsoft hasn’t publicly given its reason, but Reuters reported that it pulled out over the power delay. Nscale said: “Our relationship with Microsoft remains strong and long-term,” and that “this unfortunate London-wide grid issue has no impact on our other contracts.” It added: “We remain committed to both the Loughton project and the UK.”
For Microsoft, one 50MW site is a small part of a very large spending plan. For Nscale, which filed to list its shares in New York last month, it is a large customer leaving its flagship UK project. For Britain, it shows that the limit on building AI infrastructure is now the electricity grid.
What was planned at Loughton
- September 2025. Microsoft announced it would invest $30bn in the UK from 2025 to 2028, including “$15 billion in capital expenditures”. Part of that was to “build the country’s largest supercomputer — with more than 23,000 NVIDIA GPUs — in partnership with Nscale”.
- October 2025. Nscale said of the Loughton site: “The 50MW facility, scalable to 90MW, will house approximately 23,000 NVIDIA GB300 GPUs from Q1 2027 to power Microsoft Azure services.”
- July 2026. The Next Web, citing Sifted, reported that the grid could not connect the site in time for its planned opening. Nscale said then that it remained “fully committed to the Loughton project”.
- 18–19 October 2026. Microsoft leaves. Property Week reported on 19 October that power the developers had expected this year may now not come until the early 2030s.
Nscale says it is looking at other ways to power the site. It hasn’t said what they are.
Why the grid is the bottleneck
Britain’s grid has a queue of projects waiting to connect, and data centres now make up most of the new demand in it. Ofgem, the energy regulator, said in a consultation in July that contracted demand in the queue rose from 41GW in November 2024 to 125GW in June 2025, and that “around 73 GW are data centres”. For comparison, Britain’s peak electricity demand in 2025 was 45GW. That means the queue is almost three times the whole country’s peak demand.
Not all of those projects are real. Ofgem describes its proposals as “tackling speculative data centre projects”, with rules to clear them out of the queue. Eleanor Warburton of Ofgem said the queue “has more than tripled in size in less than a year”. Until the queue is cleared, real projects such as Loughton wait in line with speculative ones.
The government already knew about the problem. Its November 2025 plan for AI Growth Zones called grid connections “the single biggest blocker” and promised measures that “will reduce time to power by up to 5 years”. It also offered electricity discounts for large data centres in Scotland, Cumbria and the North East from April 2027. Loughton is not in an AI Growth Zone, and Nscale itself called the problem a “London-wide grid issue”.
What it means for Nscale’s listing
Nscale filed for a New York Stock Exchange listing under the ticker NSCL on 18 September. Its registration statement shows how much the company depends on Microsoft:
- Between September 2025 and April 2026, Nscale signed statements of work with Microsoft worth up to about $43.8bn through December 2033, “subject to the satisfaction of delivery and availability of service requirements”.
- Its largest customer was 52% of revenue in the first half of 2026 and 73% in 2025. The filing doesn’t name it.
- It reported $103.4bn of active and contracted total contract value at 31 August 2026.
- Among its risk factors, it lists “grid connection delays and capacity constraints”.
Bloomberg reported that Nscale is seeking to raise up to $3bn in the listing, and that Microsoft and Anthropic account for about 85% of its contracts. Nscale has not yet filed an updated prospectus with a price range. The listing comes in a month when investors have been selling CoreWeave’s debt and questioning how AI data-centre builders pay for their sites. This is the second partner to step back from its UK plans: the S-1 says that “In April 2026, OpenAI withdrew from the Stargate Norway and Stargate UK partnerships.”
What it means for Microsoft
Very little, in financial terms. Microsoft spent about $35.8bn on property and equipment in its April–June quarter alone (our calculation from its annual and quarterly filings). A 50MW site is small next to that, and Microsoft says the decision relates to one site only. Its shares closed at $533.52 on Nasdaq on 19 October, up 0.8%. Microsoft hasn’t said whether the supercomputer it promised will be built somewhere else in the UK.
Microsoft reports its July–September results on 28 October, after the US market closes. That will be its first chance to comment on its spending plans since the Loughton decision.
Our take
FAQ
Why did Microsoft pull out of Nscale’s Loughton data centre? Microsoft hasn’t publicly given a reason. The Telegraph reported that Nscale was told grid power at the site would not be available until the 2030s, and Reuters reported that Microsoft pulled out over the power delay. Microsoft said the decision “relates to a single site.”
Is Microsoft cancelling its $30bn UK investment? Microsoft hasn’t said that. Its statement covers only the Loughton site.
What is Nscale? Nscale is a UK-based AI cloud company that builds and runs GPU data centres. Its largest customers include Microsoft and Anthropic, and it has filed to list on the New York Stock Exchange as NSCL.
Why can’t new data centres in the UK get power? The queue for grid connections has grown much faster than the grid. Ofgem says contracted demand waiting to connect reached 125GW in June 2025, almost three times Britain’s 2025 peak demand of 45GW, and about 73GW of it is data centres.
