Microsoft Walks Away From Britain's 'Largest Sovereign AI Datacentre' Because the Power Isn't Coming

When the UK government launched its AI strategy in 2025, one project got star billing. Nscale’s datacentre at Loughton in Essex was described as the “largest UK sovereign AI datacentre”, a symbol of Britain building its own computing muscle instead of renting it from abroad. It was due to open next year.

That plan has now lost its most important customer. Microsoft, expected to be the anchor tenant, has told Nscale it is pulling out of the agreement, according to the Telegraph, which first reported the move, and the Guardian. The reason, the Guardian reports, is concern about power supplies.

A datacentre without a plug

The trouble has been building for months. In March the Guardian revealed that the Loughton site was still an operational scaffolding yard. Last month it reported that power supply problems meant the project would miss its 2027 launch and could be held back into the mid-2030s. The Next Web says Nscale has been told not to expect a power supply until the 2030s.

That is the awkward truth behind the AI boom. Chips and software get the headlines, but a large datacentre needs a grid connection on the scale of a small town. In much of the south-east of England, the queue for those connections stretches years into the future. You can build the shed, fill it with Nvidia hardware and sign up the biggest names in tech. If the electricity isn’t there, none of it switches on.

What it means for Nscale

The Guardian reports that Microsoft was Nscale’s only publicly announced customer for the Essex site, although it is understood to remain on board for another Nscale project in Norway. The timing is difficult. Nscale, which is backed by Nvidia among others, is preparing to float in the US. The Next Web reports it is seeking to raise as much as $3bn in an IPO as soon as this month, and that Microsoft and Anthropic account for about 85% of its contracts according to its filing. Anthropic agreed in August to spend $45bn on Nscale compute over six years.

The Next Web, citing Bloomberg, also reports that Nscale’s flagship Norway site is running behind schedule, with only 6.4 megawatts of a planned 30 megawatts operating.

Nscale says it is not giving up on Loughton. “We remain committed to both the Loughton project and the UK, and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK,” a spokesperson said. “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.” Microsoft did not comment to the Telegraph.

The bigger picture

Britain wants to be an AI superpower, and ministers have spent two years announcing datacentre investment with real enthusiasm. Loughton is a reminder that a press release can’t skip the grid queue. Until connection times shrink, the country’s AI ambitions will be limited less by talent or money than by cables, substations and planning decisions.

For investors and policymakers alike, the lesson is simple: when someone announces a giant AI facility, the first question shouldn’t be how many chips it will hold. It should be where the power is coming from, and when.

The Daily Snark’s commentary is based on public reporting linked above.