Microsoft Quits Nscale's Essex Data Centre Weeks Before Its Wall Street Debut
Microsoft ends the Loughton agreement
Microsoft has terminated its agreement with British cloud provider Nscale for a data centre in Loughton, Essex, the Telegraph reported on Sunday. The US company was one of Nscale's two largest customers and had been expected to take the anchor tenancy at the site. The newspaper did not say why Microsoft withdrew, and Microsoft did not immediately respond to Reuters requests for comment outside regular business hours. The decision leaves Nscale without any publicly announced customer for a campus that British ministers once called the country's largest sovereign AI data centre.
Nscale says the project continues
A Nscale spokesperson told Reuters the company remains committed to both the Loughton project and the UK, and is exploring alternative power sources for the site alongside other expansion locations in Britain. The spokesperson added that its relationship with Microsoft remains strong and long-term and that the London-wide grid problem has no impact on its other contracts. According to the Guardian, Microsoft is understood to remain on board for a separate Nscale project in Norway.
The chips were booked, the power was not
A pledge made during Trump's state visit
The Telegraph reported that Microsoft's backing for Loughton formed part of GBP 22bn in UK investments the company promised last year, during Donald Trump's state visit, when then prime minister Keir Starmer described the money as a step towards Britain becoming a world leader in AI. The government highlighted Loughton when it set out its AI strategy in 2025, calling it the largest UK sovereign AI data centre. Nscale had pledged GBP 2bn to the UK data centre industry in January 2025 and said the facility would create about 250 permanent jobs. There was doubt earlier this year as well: the Guardian reported in March that the location was still operating as a scaffolding yard.
Losing the anchor tenant before listing
Norway's flagship is already behind
Loughton is not the only site under pressure. Nscale's flagship Glomfjord facility in Norway is running about six months late, with only 6.4MW of a planned 30MW in service after cooling pipe leaks, local regulatory hurdles and a transformer fire last December, Bloomberg reported. A Norwegian safety agency identified 10 violations before closing the case in September.
Britain's grid queue is the real bottleneck
The problem is bigger than one developer. Ofgem said in June that 315 data centres were queuing for grid connections, together seeking 73GW, against a national peak electricity demand of 45GW. In July the regulator proposed upfront connection fees of GBP 237,500 to GBP 712,500 per megawatt to clear speculative applications.
Two open questions: alternative power and IPO pricing
Two things matter from here: whether Nscale can rescue Loughton with on-site generation or power bought elsewhere, and how the loss of an anchor customer feeds into its IPO pricing. Investors are being asked to fund a backlog of contracted revenue whose first megawatts have not yet been connected to the grid.
