Microsoft pulls out of Nscale's Essex AI data center, the Telegraph reports, as grid delays stall the site

Microsoft has pulled out of its agreement to anchor Nscale's planned artificial intelligence data center in Loughton, Essex, the Telegraph reported on Sunday, Oct. 18, a setback for a British company that is preparing to list its shares in New York. The site has been waiting on a grid connection that earlier reports said may not come until the 2030s.

What the report says

Microsoft recently told Nscale it was ending its agreement for the Loughton site, according to the Telegraph's report, which said Microsoft had been the only announced customer there and had agreed to rent about 23,000 Nvidia AI chips at the facility. Microsoft did not comment to the newspaper and did not immediately respond to Reuters, which carried the report on Sunday.

Nscale's statement did not say whether the agreement had ended. "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 said. The company said it remains "committed to both the Loughton project and the UK" and is "exploring alternative power sources for the site, in addition to other expansion sites in the UK."

What Loughton was supposed to be

When the two companies announced the commitment on Sept. 16, 2025, Nscale said the Loughton campus would deliver 50 megawatts of AI computing capacity, scalable to 90 megawatts, and would initially house 23,040 Nvidia GB300 graphics processors delivered in the first quarter of 2027. Nscale billed it as the UK's largest AI supercomputer, and it was meant to help run Microsoft's Azure cloud services in Britain.

Microsoft tied the project to a $30 billion investment it said it would make in the UK from 2025 through 2028, announced on the eve of President Trump's state visit. Microsoft President Brad Smith wrote at the time that the spending would let the company build "the country's largest supercomputer — with more than 23,000 NVIDIA GPUs — in partnership with Nscale."

The power problem was already public

The site's electricity problem surfaced last month. On Sept. 24, the Guardian reported that UK Power Networks, the company due to connect Loughton to the local grid, had reportedly told Nscale it could not supply enough power until the early to mid-2030s, a delay first reported by the AI industry newsletter Morning Intelligence. Nscale said then that it was committed to the project and was looking at generating power on site and at speeding up the connection. UK Power Networks said it could not comment on individual projects but said many data centers that connect to its network are waiting for work on the national transmission system before they can begin operating.

The queue is long. The same report cited Ofgem, the energy regulator, as saying in June that 315 data centers were waiting to connect to the National Grid, representing 73 gigawatts of demand, against peak demand for the whole country of 45 gigawatts.

Why it matters for Nscale's listing

Nscale filed on Sept. 18 to list its shares on the New York Stock Exchange under the symbol NSCL, and its prospectus shows how much of the company's pitch rests on Microsoft. Between September 2025 and April 2026, Nscale signed statements of work with Microsoft that provide for payments of up to about $43.8 billion through December 2033, subject to delivery and service-availability requirements. That is about 42% of the $103.4 billion in active and contracted customer contract value Nscale reported as of Aug. 31, by TickerGrove's calculation. Only $2.6 billion of that larger total was active.

The filing does not break out what the Loughton agreement was worth, and the original report said the UK deal is believed to be a small part of Nscale's Microsoft business. The prospectus does describe the kind of risk at issue. It lists "grid connection delays and capacity constraints" among the factors that can hold up projects, and it says certain customer contracts "provide the applicable customer with a right to terminate for delays." Neither company has said whether such a provision played any part at Loughton.

Another British plan loses a partner

Loughton would be the second of Nscale's British plans to lose a major partner this year. The prospectus says OpenAI withdrew in April from Stargate UK, a planned network of British sites, and from Stargate Norway, and that Microsoft then expanded its agreement to take the extra computing capacity in Norway.

Nscale has not said whether the Loughton change affects the timing of its own offering.