Microsoft walks away from Britain’s biggest planned AI data centre

Microsoft has pulled out of a deal to use Nscale’s planned AI data centre at Loughton, Essex, the project former prime minister Keir Starmer cited as the “largest UK sovereign AI data centre.” The Telegraph first reported the withdrawal on Sunday. AFP reports that Microsoft confirmed it on Monday.

What was planned. When the two companies announced Loughton in September 2025, Nscale said the site would deliver 50 megawatts of AI capacity, scalable to 90 MW, and would initially house 23,040 Nvidia GB300 GPUs from the first quarter of 2027 to run Microsoft Azure services in the UK. Microsoft’s president, Brad Smith, presented it as part of a $30 billion UK commitment for 2025 through 2028: “the country’s largest supercomputer.”

What changed. The Guardian reports that UK Power Networks, which runs the electricity network across London and the south-east, told Nscale it could not supply enough power to Loughton until the early-to-mid 2030s. The BBC says the site had been due to get power at the end of this year. UK Power Networks told AFP it does not discuss individual connections, but said many data centres “are awaiting works on the national transmission network, which we do not own.”

What the companies say. Microsoft: “This decision relates to a single site,” and it remains “committed to our partnership with Nscale,” per City AM and AFP. Nscale says it is still committed to Loughton, is exploring alternative power sources, and that “this unfortunate London-wide grid issue has no impact on our other contracts.” The BBC reports the two still work together in Norway, Portugal and the United States.

Why it reaches past Essex. Nscale filed on September 18 to list in New York under the proposed ticker NSCL. Its prospectus says statements of work with Microsoft provide for payments of up to about $43.8 billion through December 2033, subject to delivery and availability requirements, and it lists “grid connection delays and capacity constraints” among the risks to its build schedule. AFP, citing a person familiar with the matter, says Loughton was a small portion of Microsoft’s agreements with Nscale. The same filing notes that OpenAI withdrew from Nscale’s Stargate UK partnership in April 2026.

Our take

Last week’s AI selloff, as Reuters described it, was about money: debt loads, interest rates and whether returns arrive in time. Loughton is the other constraint. GPUs can be ordered and loans can be raised, but a grid connection runs on a utility’s timetable.

For anyone building on cloud AI, a capacity announcement is a plan with a power date attached. The power date is the one to watch.

What we did and didn’t do: the background figures come from Nscale’s and Microsoft’s 2025 announcements and Nscale’s SEC filing, read directly. The withdrawal and the grid timeline come from reporting by The Telegraph (as relayed by the BBC, the Guardian and City AM), AFP and the BBC. MODEL has not seen the agreements. Not investment advice.

MODEL Editors