Microsoft
Microsoft exits Nscale's Essex AI data center, Telegraph reports
Microsoft has ended its agreement to anchor Nscale's planned Loughton data center, leaving the Essex site without its only publicly announced customer.
Microsoft has ended its agreement to anchor Nscale’s planned AI data center at Loughton, Essex, leaving the site without its only publicly announced customer. The exit could hurt Nscale’s plan to list on a US exchange.
The Telegraph Broke the Withdrawal
The Telegraph reported Oct. 18 that Microsoft terminated the deal. Reuters relayed the report the same day, saying Microsoft is one of Nscale’s two largest customers, according to the Telegraph. Microsoft did not immediately respond to Reuters requests for comment outside regular business hours.
The Guardian’s headline said Microsoft pulled out over power supply concerns.
Grid Power Held Up the Site
Grid officials told Nscale they did not expect to supply power to the site until the 2030s, the Telegraph reported, adding that Nscale had faced repeated delays. The site was planned to open next year.
The Guardian revealed in March that the site was still an operational scaffolding yard. A month ago it emerged that power problems meant a lengthy wait before the site could come online. UK ministers called Loughton the country’s largest AI data center when it was announced in 2025, and the Starmer government’s 2025 AI strategy described it as the “largest UK sovereign AI datacentre.”
Nscale Says It Remains Committed
An Nscale spokesperson told Reuters, and the Guardian repeated, “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.”
The spokesperson added: “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.” The Guardian reported it is understood Microsoft remains on board for another Nscale project, in Norway.
The Listing Plan Is Exposed
Nscale filed for a US initial public offering last month, Reuters reported. Its prospectus says Microsoft and Anthropic are expected to be major customers. The Guardian said the withdrawal could hurt Nscale’s plan to list on Wall Street this year at a potential valuation of $35 billion (£26 billion).
Nscale, which is backed by Nvidia, provides compute, power and data centers plus software for training and running AI models. It competes with CoreWeave, Nebius, Crusoe and Lambda, Reuters reported, and grew from $100 million to more than $103 billion in total contracted value in two and a half years.
What It Means for the Labs
We think Loughton shows how much the labs depend on capacity other companies build. Microsoft and Anthropic, the labs named as Nscale customers, rely on third parties for data center space. The blocker the Telegraph, Reuters and the Guardian describe is grid power on a timeline running into the 2030s. Nscale says the grid problem is London-wide and does not affect its other contracts. We think a lab renting capacity takes on the power schedule of whatever site it rents.