Microsoft pulls out of Essex AI datacentre over power concerns

Microsoft has withdrawn from an agreement to use a planned AI datacentre at Loughton, Essex, over concerns about electricity supply to the site.

The company informed Nscale, the developer behind the project, that it was ending its agreement, The Guardian reported on 18 October 2026. Microsoft had been expected to be the anchor tenant, or main customer, of the facility, which as of October 2026 was planned to open next year.

The project was announced in 2025 and hailed by UK ministers as the country's largest AI datacentre. The government highlighted it when setting out its AI strategy that year, describing it as the "largest UK sovereign AI datacentre." Microsoft had said its partnership with Nscale would create the UK's largest supercomputer at Loughton to support services in the UK.

Concerns about power emerged a month before 18 October 2026, with the project facing a lengthy wait before it could come online. The Guardian had reported in September 2026 that the grid would not be able to supply sufficient power to the Loughton datacentre until the early to mid-2030s. In March 2026, it reported the site was still an operational scaffolding yard.

The end of the deal means Nscale has lost its only publicly announced customer for the Essex site. Microsoft remains involved in another Nscale project in Norway.

Nscale said it remains committed to the Loughton project and to the United Kingdom and is exploring alternative power sources for the site as well as other expansion sites in the country. It said its relationship with Microsoft remains strong and long-term and that the London-wide grid issue has no impact on its other contracts.

The Loughton project was planned to use more than 23,000 NVIDIA GPUs, the specialised chips used in AI systems. Nscale, which is backed by firms including Nvidia, aims to float on Wall Street in 2026 with a potential valuation of $35bn (£26bn).