Microsoft Walked Away From Britain's Biggest AI Data Center Because the Grid Can't Power It Until the 2030s

Microsoft has walked away from the project ministers sold as Britain's largest sovereign AI data center. The company told Nscale it is pulling out of its agreement to anchor the Loughton site in Essex, where it had agreed to rent 23,000 Nvidia AI chips, after the local grid operator said it cannot deliver enough power until the early to mid 2030s, the Telegraph first reported on Sunday.

The timing could hardly be worse for Nscale. Microsoft was its only publicly announced customer at Loughton, and the startup is trying to float on Wall Street at a valuation of up to $35bn in the middle of a selloff in exactly the kind of debt-hungry AI infrastructure companies it represents.

From scaffolding yard to showcase

Nscale pledged £2bn to build the site, with 250 permanent jobs expected. Keir Starmer's government called it the "largest UK sovereign AI datacentre" when it launched its AI strategy in 2025, and ministers lobbied local councillors to push it through. In March this year the land was still an operational scaffolding yard. It has since been cleared, and the center was meant to open next year.

Microsoft's role was part of £22bn in UK investments it promised during Donald Trump's state visit last year, which Starmer hailed as a step toward Britain "becoming a world leader in AI." Only last month Microsoft said some of that money would fund a supercomputer at Loughton. It has now terminated its involvement and declined to comment.

The grid said no

The problem is electricity. Earlier this month UK Power Networks, which runs the grid across London and the south east, told Nscale it could not supply enough power to Loughton until the early to mid 2030s. The site had been due to get power at the end of this year. Nscale is now looking at onsite generation and ways to speed up the connection.

"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 Nscale spokesperson said. The company called the setback an "unfortunate London-wide grid issue" with no impact on its other contracts, and said its relationship with Microsoft "remains strong and long-term." Microsoft is still a partner on Nscale projects in Norway, Portugal and the US.

A test for AI debt

The stakes are mostly about the float. Nscale, backed by Nvidia and privately valued at $15bn, gets more than 40% of its $103bn in contracted revenue from Microsoft, according to the Telegraph, though the UK deal is believed to be a small slice. Anthropic is another major customer, having rented $45B of Nscale compute in West Virginia. Nick Clegg sits on the board with a 0.25% stake that could be worth $88m at a $35bn valuation, alongside Sheryl Sandberg.

The company was founded just two years ago by Josh Payne, an Australian former coal miner, and has drawn scrutiny for landing huge contracts without a track record. It has also faced delays at a flagship data center in Norway, reportedly with heavy penalties. Nvidia's Jensen Huang still praised it in London on Wednesday: "You could be the most valuable UK startup they have created in the last 10 years."

Investors are less starry eyed about the sector. Rival data center developers' shares plunged last week on fears they will struggle to repay debt as rates and inflation rise. CoreWeave and Nebius saw both shares and bonds slump, extending a slide that had already pushed CoreWeave's bonds toward distress. Australian rival Firmus cancelled a $20bn IPO this month, blaming market conditions, and Gartner warned last week that $3.5tn could be written off by 2030 if the AI boom fails to deliver. Nscale's listing is being watched as a litmus test for appetite for these businesses.

Loughton is also another reminder of Britain's power problem. High electricity prices and long waits for grid connections are a major barrier to AI infrastructure in the country. In April, OpenAI suspended plans for a Stargate facility with Nscale on Tyneside, blaming high UK electricity prices.

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