Why Microsoft left Nscale's Loughton AI data centre

Last checked 2026-10-25

Short answer

Microsoft pulled out of anchoring Nscale's Loughton, Essex data centre because grid officials told Nscale they did not expect to supply power there until the 2030s, according to Reuters. The site had been promised for Q1 2027 with 23,040 Nvidia GB300 GPUs. Microsoft says the decision covers one site. Nscale says it remains committed to Loughton.

What happened Microsoft ended its agreement to anchor Nscale's Loughton site after the expected power date slipped into the 2030s, Reuters reported on 19 October 2026.
Why it matters The GPU plan and the anchor customer were announced. The grid connection was not secured. Power, not hardware, set the timetable.
Who is affected Nscale is in a US IPO process. Media calculations put Microsoft and Anthropic at about 85% of its contracted value.
What to watch Ofgem's promised autumn 2026 update on demand connection reform, and where Nscale finds power or alternative UK sites.

Key facts

Loughton GPU plan (Sept 2025)	23,040 Nvidia GB300 GPUs, Q1 2027
Loughton capacity	50MW initially, scalable to 90MW
New expected power date	2030s (grid officials, via Reuters)
UK demand connection applications	41GW to 125GW, Nov 2024 to June 2025 (Ofgem)
Nscale active and contracted TCV	$103.4bn as of 31 August 2026 (S-1)
Microsoft UK investment plan	$30bn, 2025 to 2028

What happened at Loughton, and when?

The Telegraph first reported that Microsoft had walked away from Nscale's flagship UK data centre. Bloomberg followed on 18 October 2026, and Reuters reported on 19 October that Microsoft had pulled out of the deal to anchor the site after power connection delays pushed its expected supply date into the 2030s.

According to Reuters, grid officials had told Nscale they did not expect to supply power to the Loughton, Essex site until the 2030s. A Microsoft spokesperson said: "This decision relates to a single site." Microsoft and Nscale still work together on projects in Norway, Portugal and the US.

Nscale described the problem as a London-wide grid issue. "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts," a spokesperson told Reuters. The company said it is still committed to Loughton and is looking at alternative power sources and other UK sites.

The delay itself was not new. The slip into the mid-2030s was reported around 25 September 2026, before Microsoft's exit became public.

Date of statement	Loughton go-live target	Hardware plan
January 2025	Q4 2026	Up to about 45,000 Nvidia GB200 GPUs
September 2025	Q1 2027	23,040 Nvidia GB300 GPUs
October 2026	Early to mid-2030s (as reported)	Microsoft no longer anchor tenant

Sources: Nscale press releases (January and September 2025), press reports (October 2026).

How can a site promised for 2027 end up waiting until the 2030s?

A finished building cannot run without a grid connection, and the connection timetable is set by network operators, not by the developer or the customer. Getting a large new load onto the grid can take years.

There are two layers. UK Power Networks is a distribution network operator, the local wires that would feed Loughton. But connections for large loads can depend on upgrades to National Grid's transmission network, the high-voltage backbone. UK Power Networks would not comment on Loughton, but said many data centres due to connect to its network are waiting for work on the wider national transmission network before they can begin operation.

Then there is the queue. Ofgem says demand connection applications rose from 41GW to 125GW between November 2024 and June 2025, with data centres making up about 80GW. A report published on 27 February 2026 put Great Britain's peak demand at about 45GW on 11 February, with about 140 data centres asking for about 50GW in the queue. The two counts measure different things, but both point the same way: data centre requests alone exceed what the whole country draws on its busiest day.

The system operator, NESO, has tried to sort this. Under its Gate 2 reform, summarised by Knight Frank, it accepted 283GW of generation and storage and 99GW of transmission-connected demand, split into Phase 1 (connected by 2030) and Phase 2 (by 2035). Gate 2 covers transmission-connected demand. Distribution-connected sites like those on UK Power Networks' network can still be held up by the transmission upgrades those phases schedule. Reuters reported that queue bottlenecks are delaying UK data centre projects by as much as 13 years.

What was promised for Loughton, and by whom?

On 13 January 2025 the UK government launched its AI Opportunities Action Plan, promising AI Growth Zones with faster planning and better access to the energy grid. The same release highlighted Nscale's plan for the largest UK sovereign AI data centre in Loughton by 2026. That day Nscale pledged £2 billion ($2.5 billion) for UK data centres over three years, starting with Loughton.

In September 2025 the project reappeared among the technology deals announced during President Trump's state visit to the UK, Reuters said. Microsoft announced a $30 billion UK investment for 2025 to 2028, including $15 billion in capital spending and the country's largest supercomputer, with more than 23,000 Nvidia GPUs, to be built with Nscale.

The £2bn is Nscale's pledge and the $30bn is Microsoft's. The government promised AI Growth Zones better access to the grid, but neither company controls the grid. The head of Microsoft UK said on 21 October that the company remains fully committed to its plan and called Loughton "a small component" of the $30 billion.

Loughton is also separate from Stargate UK, the OpenAI, Nvidia and Nscale project in north-east England's AI Growth Zone. AI Growth Zones were promised better access to the energy grid, and Ofgem's next phase of reform may give their projects priority.

What does this mean for Nscale's IPO?

Nscale filed a Form S-1 on 18 September 2026 to list on the NYSE under the ticker NSCL. As of 31 August 2026 it reported about $2.6 billion of active total contract value (TCV) and $103.4 billion of active and contracted TCV. Reuters says contracted value grew from $100m to more than $103bn in two and a half years.

The filing lists Anthropic agreements worth up to about $44.6 billion and includes a risk factor warning that losing, or seeing reduced spend from, one or a few top customers would hurt the business. Investing.com's reading puts Microsoft at about $43.8 billion (through 2033), making the two customers 85% of the total. That 85% is a media calculation from the filing's figures, and it describes contracted value, not revenue.

The S-1 figures are as of 31 August 2026, weeks before Microsoft's exit was reported, and no public figure shows how much of Microsoft's $43.8bn, if any, related to Loughton. Watch any amended filing for a revised TCV.

On current trading, Nscale reported first-half 2026 revenue of $140.6 million, up from $10.4 million a year earlier, and a net loss of $1.02 billion. Reports say it is seeking to raise $3 billion at a valuation of up to $35 billion. Its rivals include CoreWeave, Nebius, Crusoe and Lambda.

Nvidia chief executive Jensen Huang commented on 22 October. He said he was "quite confident that they will find solutions." He added that "their solution starts with the fact that they have excellent customers, demand is really high, and they just need working capital."

What should readers watch next?

Most of the next steps sit with regulators. On 29 July 2026 Ofgem proposed a commitment fee of £237,500 to £712,500 per MW for demand connections, plus milestones a project must hit to keep its place in the queue. The aim, Ofgem said, is that consumers should not bear the risks of speculative projects taking up space. The consultation closed on 16 September 2026, and Ofgem has said it would give an update on demand connection reform in autumn 2026.

The fee is charged per MW, so the total would grow with the size of a site. Loughton's initial capacity is 50MW. The fee is only a proposal, and Ofgem has not said how it would apply to any specific site.

Ofgem's autumn 2026 update on demand connection reform, including any priority for AI Growth Zone projects.
Whether Nscale announces alternative power sources for Loughton or a different UK site.
Nscale's IPO pricing date and final raise, neither of which has been confirmed.
Any change to the expected 2030s connection date from network operators.

What is not confirmed?

Several details in circulation rest on single or secondary sources.

The exact date Microsoft terminated the agreement. Bloomberg's follow-up ran on 18 October and Reuters reported on 19 October.
UK Power Networks would not comment on Loughton. The early to mid-2030s date comes from press reports: the Guardian around 25 September 2026 (via Resultsense) and Data Centre Review in October.
The 85% customer share is a calculation by media outlets, not a figure stated in the S-1.
Any link between Microsoft's exit and the roughly $200 billion chip sell-off reported on 23 October. The same report attributed the sell-off to a Lam Research supply-chain warning.
Whether any of Microsoft's reported $43.8bn of contracted value was tied to Loughton. Neither company has said.

FAQ

Why did Microsoft pull out of the Nscale Loughton data centre?

Reuters reported that grid officials told Nscale they did not expect to supply power to the Loughton site until the 2030s. The project had been due to go live in Q1 2027.

Has Microsoft ended its partnership with Nscale?

No. Microsoft said the decision relates to a single site, and the two companies still work together on projects in Norway, Portugal and the US.

Is the Loughton project cancelled?

Nscale says it is still committed to Loughton and is looking at alternative power sources and other UK sites.

Why are UK data centres waiting so long for power?

Large loads often need upgrades to the national transmission network, and the queue is crowded. Ofgem says demand connection applications rose from 41GW to 125GW between November 2024 and June 2025, about 80GW of it from data centres.

Where will Nscale list its shares?

Its S-1 filing says the NYSE under the ticker NSCL. No pricing date has been confirmed.

Sources

Figures change. Check the primary sources above.