Full Breakdown
Microsoft Withdraws from Nscale’s Planned Loughton AI Datacentre
By Drooid · · How we work
Project Overview and Setback
On October 18, reports confirmed that Microsoft has terminated its agreement to be the anchor tenant for Nscale’s AI datacentre in Loughton, Essex. The facility, announced by the UK government in 2025 as the nation’s largest “sovereign” AI datacentre, was slated to open the following year. Microsoft’s withdrawal removes the only publicly announced customer for the project, raising doubts about its near-term viability.
Power Supply Issues
National power-grid officials have warned that sufficient electricity for the Loughton site is not expected until the 2030s. The delay in securing a reliable power supply was cited as a key factor behind repeated project setbacks, according to the Telegraph report referenced by Reuters and other outlets.
Corporate Reactions
Nscale’s spokesperson emphasized that the company remains committed to the Loughton development and is exploring alternative power sources, while also pursuing other expansion sites across the UK. The statement also noted that the “London-wide grid issue” does not affect Nscale’s other contracts, including its ongoing relationship with Microsoft on a separate project in Norway.
Financial Implications
Nscale filed for an initial public offering in the United States last month, listing Microsoft and Anthropic as its two largest prospective customers. The loss of the anchor tenant could jeopardize the company’s plan to list this year with a projected valuation of $35 billion (£26 billion). The firm’s prospectus highlights its rapid growth, citing contracted value of more than $103 billion within two and a half years.
Future Outlook
While Nscale continues to seek alternative energy solutions for Loughton, the timeline for the datacentre’s completion remains uncertain. The company’s broader expansion strategy and its partnership with Microsoft on the Norwegian project suggest it will pursue other opportunities while addressing the power-supply challenge in Essex.