Power supply concerns grow as Microsoft drops huge AI datacentre project in Essex
Microsoft withdraws from agreement
Microsoft told Nscale it was ending its agreement for the Loughton project, according to the report. The company had been expected to be the development’s anchor tenant and was among its largest planned customers.
Microsoft’s departure is a fresh setback for the project, which has already faced questions over whether it can secure sufficient power. The site was also described as an operational scaffolding yard when doubts about the scheme were raised in March.
Government had promoted the project
The government highlighted the Loughton development when it announced the UK’s AI strategy in 2025. It called the scheme the “largest UK sovereign AI datacentre”. Datacentres provide essential infrastructure for AI technologies, including chatbots. The project was being developed by Nscale, a UK firm backed by technology companies including Nvidia.
Implications for Nscale’s plans
Nscale has presented itself as a British sovereign data centre provider. The loss of a major planned customer could challenge that ambition and weaken the project’s prospects. The setback may also affect Nscale’s plans to float on Wall Street this year. The company has been associated with a potential valuation of $35bn (£26bn).
Key points
- Microsoft has withdrawn from its agreement to use Nscale’s planned Loughton AI datacentre.
- The project was promoted by the government as the UK’s largest sovereign AI datacentre.
- Power supply concerns and questions about the site had already cast doubt on the scheme.
- Losing its expected anchor tenant could complicate Nscale’s plans to float on Wall Street.