22OCT

Microsoft quits Nscale's Essex AI site

3 min read

16:40UTC

Microsoft pulled out of its anchor deal at Nscale's Loughton site after UK Power Networks warned grid capacity might not arrive until the 2030s.

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Key takeaway

Microsoft left Loughton because UK transmission capacity may not reach Essex until the 2030s.

Microsoft has withdrawn from its anchor agreement at Nscale's planned artificial intelligence (AI) data centre at Loughton in Essex, after UK Power Networks warned that grid capacity might not be available until the 2030s⁠¹. The Telegraph reported the exit on 18 October, and Microsoft confirmed on 19 October that the withdrawal covers only Loughton⁠².

Nscale, a UK AI cloud company, announced Loughton in September 2025 as a 50 MW site, expandable to 90 MW, holding 23,040 of Nvidia's GB300 chips, graphics processors (GPUs) built for AI work. First chips were due in early 2027 for Microsoft's Azure cloud. UK Power Networks runs the local lines and substations for London and the east and south-east of England; it says many data centres are waiting on transmission works, the high-voltage network upstream, which it does not own.

Nscale says it remains "committed to both the Loughton project and the UK" and is "exploring alternative power sources for the site". The company, which is preparing a New York listing reportedly valued at up to US$35bn, says the grid problem is London-wide and touches no other contract. Ministers created GB Grid in September so businesses can build and co-fund their own connections, but GB Grid does not touch transmission, where Loughton's wait sits.

Deep Analysis

In plain English

Nscale is a British company that builds data centres for artificial intelligence (AI): buildings packed with powerful computer chips. Microsoft had agreed to be the main customer at a planned Nscale site in Loughton, Essex. UK Power Networks, the company that runs local power lines in London and the south-east, warned that it might not be able to supply enough electricity until the 2030s. The bigger high-voltage lines that feed its network need upgrading first, and it does not own those. Without a date for power, Microsoft walked away from this site. Nscale says it still wants to build there and is looking at other ways to get electricity.

Deep Analysis

Root Causes

Connection offers in Great Britain have been handed out largely in order of application. Contracted offers in the demand queue reached 125 GW by mid-2025, up from 41 GW in November 2024. Speculative and real projects sit in the same line, so a ready project can wait behind ones that may never build.

Ownership adds a second cause. UK Power Networks runs local lines and substations, but the reinforcement Loughton needs sits upstream on the transmission network. The company that tells a developer its date does not control the works that set it.

What could happen next?

Consequence
Nscale needs a new anchor customer or on-site power before Loughton can proceed.
Short term · Assessed
Risk
Investors in Nscale's planned New York listing may test the power dates at its other UK sites.
Short term · Suggested
Meaning
In England the binding constraint on AI sites is upstream transmission, not the site or the buyer.
Medium term · Assessed

Source Landscape

This story draws on neutral-leaning sources from United Kingdom and Canada

United Kingdom

Canada

LeftRight

Primary parallel: OpenAI paused its planned UK Stargate site at Cobalt Park, North Tyneside, on 23 April 2026, citing an unfavourable regulatory environment and high energy costs. Both are AI builds in England where the buyer left before the site drew power.

Counter-parallel: In Dublin, Pure DC's 110 MW microgrid began operating in April 2026, built to avoid the Irish grid-connection queue. It shows the on-site route Nscale now names can work, though Pure DC planned it from the start rather than after losing a tenant.

Loughton's announced design put 23,040 GB300 chips into 50 MW, or a little over 2 kW of site power per chip. Every year of grid delay leaves that whole load unbilled, and an anchor tenant is the contract lenders usually build against.

Nscale is preparing a New York listing reportedly valued at up to US$35bn. Losing Microsoft at one site before that listing puts investors' attention on how many of its other sites have firm power dates, which Nscale says this case does not touch.

Consensus view: UK Power Networks says many data centres are waiting on transmission works it does not own, so a distribution company cannot promise a date. By February 2026 the UK connection register already held about 50 GW of data-centre demand, against a national peak of 45 GW; a site behind that queue has no firm power year to sell.

Counter-view: Nscale reads the problem as London-wide and local to this site, not a sign that its other contracts are at risk, and says it is exploring alternative power sources for Loughton. On that reading the lost tenant is a timing failure that on-site supply could fix.

Key tension: Whether any alternative supply can be permitted and built at Loughton before chips were due in early 2027, now that the anchor buyer has gone.

Sources:The Register·BNN Bloomberg (Associated Press)·BNN Bloomberg (Associated Press)

Mentions:Microsoft →Nscale →Essex →Nvidia →Azure →GB Grid →London →England →Pure DC →Dublin →North Tyneside →OpenAI →New York →Stargate →United Kingdom →UK Power Networks →

First Reported In

Update #17 · Stalled power line cuts A$140m from NEXTDC guidance

The Register· 22 Oct 2026

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