New to this? Read it in simple words
- Nscale, a British company, plans a big AI data centre in Loughton, near London.
- Microsoft has pulled out of the project, the Telegraph and the BBC report.
- The local power grid cannot give the site enough electricity until the 2030s.
- Nscale says it still plans to build, and it is looking for other power.
- Data centre
- A building full of computers that run online services and AI.
- Anchor tenant
- The main customer that a new building is planned around.
- Power grid
- The network of lines that carries electricity to homes and businesses.
In 2025, the British company Nscale announced a large AI data centre at Loughton in Essex, near London, with Microsoft as a customer. It was planned to open next year. In March 2026, the Guardian found that the site was still a working scaffolding yard.
What the reports say
The Telegraph first reported on Sunday, October 18, that Microsoft had ended its deal for the site. The BBC said it understood that Microsoft, which had said it would fund a supercomputer there, has ended its involvement.
Microsoft declined to comment to the BBC. Neither company has confirmed the exit on the record.
The Guardian, which credits the Telegraph with the news, says Microsoft was expected to be the site’s anchor tenant. Nscale has now lost its only publicly announced customer for Loughton, according to the Guardian.
From the BBC, the Guardian and the Telegraph. Microsoft has not commented.
The power problem
UK Power Networks, which runs the electricity grid in London and south-east England, told Nscale that it could not supply enough power until the early to mid-2030s, the Guardian reports. The BBC says the site had been due to get its power at the end of this year.
Nscale says it is looking at other power sources for the site, and at other places to grow in the UK. According to the Guardian, it is checking whether it can make its own power on site, and whether the grid connection can come sooner.
“This unfortunate London-wide grid issue has no impact on our other contracts,” Nscale told the BBC.
What it means for Nscale
“Our relationship with Microsoft remains strong and long-term,” an Nscale spokesperson said. The two companies still work together in Norway, Portugal and the United States, the BBC reports.
Nscale filed papers for a New York stock market listing with the US Securities and Exchange Commission on September 18. The Guardian says that losing the anchor tenant could undermine that plan.
The government highlighted Loughton in its AI plans in 2025, calling it the “largest UK sovereign AI datacentre”, the Guardian reports. The site is expected to create 250 permanent jobs when it opens, according to the BBC.
Sources
Every fact in this story comes from the sources below. Open them to check our work.
- 1
- 2Research · October 18, 2026Microsoft pulls out of AI datacentre project in Essex over power supply concerns The Guardian
- 3Research · October 18, 2026Microsoft axes AI deal in setback for UK data centre pioneer The Telegraph
- 4Primary source · September 18, 2026Nscale Ltd: Form S-1 registration statement US Securities and Exchange Commission
Microsoft’s exit rests on the Telegraph’s and the BBC’s own sources, and neither company has confirmed it on the record. Reports give different dates for when the power delay became known, so we leave the date out.
Microsoft’s reported exit leaves Nscale’s flagship Essex site without its only announced customer, while the grid cannot supply enough power until the 2030s. How we rate the mood