Microsoft has pulled out of a planned artificial intelligence data center in the United Kingdom. The reason is not a chip shortage, a funding gap, or a change in strategy. The building simply couldn’t get enough electricity.
The facility, developed by AI infrastructure company Nscale in Loughton, Essex, was supposed to supply computing power to Microsoft’s Azure cloud business. Microsoft ended its anchor-tenant agreement for the site on October 18, 2026. The trigger was UK Power Networks telling the project that adequate grid power would not reach the site until the early to mid-2030s.
The data center was meant to open in late 2026 or early 2027.
What was supposed to be built in Essex
On paper, Loughton was a serious project. It was pitched as the UK’s largest sovereign AI data center, meaning computing capacity located and controlled within the country’s borders.
The plan called for an initial capacity of 50 MW, with room to expand to 90 MW. Those servers were to include 23,040 Nvidia GB300 GPUs, all dedicated to Microsoft Azure workloads.
Microsoft says the broader relationship is fine
Microsoft has been careful to frame this as a site problem rather than a partner problem. The company said its wider partnership with Nscale remains strong.
Its other contracts with Nscale, covering projects in Norway, Portugal, and the United States, are not affected by the Loughton decision.
The less reassuring part involves Norway. Nscale’s flagship site there is also running behind, with only 6.4 MW of its planned 30 MW capacity currently operational.
Nscale, for its part, is not abandoning Essex. The company is exploring on-site generation options, including fuel cells, to power the Loughton facility. It also says it is still pursuing expansion opportunities elsewhere in the UK.
The UK’s grid problem
The Loughton cancellation lands on a sore spot for British policymakers. The project was closely tied to the government’s goal of positioning the UK as a leader in AI.
Those ambitions were showcased during high-profile US-UK tech diplomacy events in 2025.
The UK grid has a well-documented connection backlog. Some projects have reportedly faced delays of up to 13 years waiting to be hooked up.
What this means for Nscale and AI infrastructure
The most immediate stakeholder is Nscale. The company filed for a US IPO in September 2026, targeting a valuation of up to $35 billion. That valuation leans primarily on its contracts with Microsoft and Anthropic.
Losing Microsoft as anchor tenant at one site, a month after filing to go public, is awkward timing. Microsoft’s statement that other contracts remain intact helps, but the Norway shortfall raises questions about how many other sites face similar power constraints. A company valued on future capacity needs to show it can actually bring that capacity online.
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