Microsoft has withdrawn from an agreement with British AI infrastructure provider Nscale for a data centre in Loughton, Essex, according to a report by The Telegraph cited by Reuters.
The US technology company, which is one of Nscale’s two largest customers, reportedly terminated its agreement for the site due to repeated delays.
The Telegraph reported that officials had indicated the national power grid wouldn’t be able to supply sufficient electricity to the facility at least until the 2030s.
Microsoft declined to comment to Reuters. Meanwhile, Nscale said its relationship with Microsoft remained strong despite the setback and that the grid issue wouldn’t affect its other contracts.
Power Delays Affect Data Centre Plans
The Loughton facility was planned as a major AI computing site, designed to support Microsoft's Azure services in the UK. The project was announced in September 2025 as part of plans to expand the country's AI infrastructure.
According to the Financial Times, Microsoft had planned to lease the site's entire 50MW capacity. The facility was also expected to house approximately 23,000 Nvidia chips for AI computing workloads.
The reported withdrawal follows delays that were affecting the project's expected electricity connection. The site had initially been expected to become operational in 2026, but the reported grid connection timeline now extends beyond 2030.
Despite all this, Nscale hasn’t abandoned the project. A company spokesperson told Reuters that it remained committed to the Loughton site and the UK, adding that it was exploring alternative power sources alongside other potential expansion locations.
Nscale Maintains Its Relationship With Microsoft
Despite the reported cancellation, Nscale said its broader relationship with Microsoft remained strong and long-term.
The company provides computing infrastructure, data centres, power and software used to train and operate AI models. It has expanded rapidly as demand for AI computing capacity has increased.
Nscale filed for an initial public offering in the United States in September 2026. According to its prospectus, Microsoft and AI company Anthropic are expected to be among its major customers.
The withdrawal concerns only the Loughton agreement. Neither company has announced that their wider commercial relationship has ended.
UK Grid Constraints Remain a Challenge
The development comes as data centre operators face challenges securing electricity connections for new facilities across the UK.
In July, energy regulator Ofgem said 315 data centre projects were waiting to connect to the national grid, representing approximately 73GW of requested capacity. This exceeded the country's peak electricity demand of around 45GW, according to Reuters' reporting.
Grid connection delays have prompted changes to how new projects are prioritised, while Ofgem has also proposed changes to the fees associated with connecting large electricity users.
Nscale said it was exploring alternative power sources for the Loughton facility and remained committed to expanding its UK operations. No revised completion date or replacement customer for the site has been announced.
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