Microsoft pulls out of Nscale's Essex AI data centre over grid power delays

The Guardian reported on October 18, 2026 that Microsoft has ended its agreement to be a customer of the huge AI data centre that British firm Nscale is planning at Loughton in Essex. Microsoft was expected to be the anchor tenant, and it was the only publicly announced customer for the site. The UK government had promoted the project in 2025 as the country's largest sovereign AI data centre, and it had been due to open next year.

The core problem is electricity. Earlier this month UK Power Networks, which runs the grid across London and the south-east, told Nscale it could not supply enough power to the site until the early to mid-2030s. Nscale says it is still committed, has cleared the former scaffolding yard on the site, and is looking at generating power on site and at ways to speed up the grid connection.

The setback lands while Nscale, which is backed by Nvidia, hopes to list on Wall Street this year at a possible $35bn valuation. Microsoft is understood to remain a partner on a separate Nscale project in Norway, and Nscale says the London grid issue does not affect its other contracts.

Why it matters

Power, not chips, is becoming the hard limit on AI cloud capacity, and this shows how a grid delay can sink a flagship project.

Source: The Guardian