Microsoft exits UK's largest planned AI data center, power delayed to 2030s

The power problem: UK Power Networks, which runs the electricity grid across London and the southeast of England, has told Nscale it can't supply enough power to the site until the early to mid-2030s, the Guardian reported. The center had been due to open in 2027. Nscale is looking at generating power on site and at ways to speed up the grid connection.

Nscale's response: "We remain committed to both the Loughton project and the UK, and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK," a spokesperson said. "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts." The two companies are still working together in Norway, Portugal and the United States, the BBC reported.

What was planned: Nscale pledged £2 billion for the site, which was expected to create 250 permanent jobs, the BBC reported. In 2025 the company said it would install about 23,000 Nvidia AI chips there to support Microsoft's Azure cloud, and the project was announced as part of the first U.S.-UK tech deal, Euronews reported. Keir Starmer's government featured it in its 2025 AI strategy as the "largest UK sovereign AI datacentre," the Guardian reported. Only last month, Microsoft said some of the $30 billion it is investing in Britain would fund the Loughton supercomputer, according to the BBC.

The money angle: Nscale, which counts Nvidia among its investors, filed last month for a U.S. initial public offering, with Microsoft and Anthropic expected to be its major customers, Reuters reported. The Guardian said the company had hoped to list in New York at a valuation of up to $35 billion, and that losing its anchor tenant at Loughton could undercut that. Nscale competes with CoreWeave, Nebius, Crusoe and Lambda in renting AI computing power.

Timeline: In 2025, Nscale announced the Loughton site, and the UK government featured it in its AI strategy. In March 2026, the Guardian reported the site was still a working scaffolding yard; Nscale has since cleared it. On Sept. 24, 2026, the Guardian reported the 2027 opening could slip into the mid-2030s over power. Last month, Nscale filed for its U.S. listing, and Microsoft tied part of its $30 billion UK pledge to the site. On Oct. 18, 2026, the Telegraph reported Microsoft had ended the deal.

What's still unknown: Microsoft's own reason for leaving; whether Nscale can find another anchor customer or on-site power for Loughton; and whether the loss changes the timing or price of its planned U.S. stock listing.

The Telegraph first reported Microsoft's exit on Oct. 18; Reuters, the Guardian, the BBC and the Financial Times followed. Microsoft declined to comment to the BBC and Reuters and has not said why it ended the deal. The link to the power delay comes from Nscale's statement, which calls it a "London-wide grid issue," and from the outlets' reporting. Reuters noted the Telegraph did not give Microsoft's reason. The FT article is paywalled.