The technology giant confirmed the decision on Monday, October 19, but stressed that its broader partnership with the British AI infrastructure provider remained unchanged. “This decision relates to a single site,” a Microsoft spokesperson said, reaffirming the company’s commitment to its partnership with Nscale.
The agreement was announced last year alongside major US technology investment pledges during President Donald Trump’s state visit to the UK. Former Prime Minister Keir Starmer described the proposed facility as the “largest UK sovereign AI data centre”. However, British media reports indicated that grid officials had informed Nscale that electricity would not be available at the site until the 2030s.
Nscale, which is backed by Nvidia, said it remained committed to the Loughton project and was exploring alternative power sources. “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 company spokesperson said.
The spokesperson added that Nscale’s relationship with Microsoft remained strong and long-term, stressing that the wider grid constraints affecting London would not impact its other contracts. A person familiar with the matter said the Loughton agreement accounted for only a small proportion of Microsoft’s contracts with Nscale.
The development comes as Nscale prepares for a potential listing on the New York Stock Exchange, with reports suggesting the company is targeting a valuation of up to $35 billion. In its listing documents, Nscale acknowledged that “a substantial portion of our committed revenue is driven by a limited number of customers with large contracts”, naming Microsoft and Anthropic among its key customers.
Earlier this year, OpenAI also withdrew from a proposed partnership with Nscale and Nvidia to develop a UK version of Stargate, a large-scale AI infrastructure initiative. British media reports said OpenAI’s decision was influenced by high energy costs and regulatory uncertainty.
Electricity prices and lengthy grid connection timelines have become significant obstacles for some UK data centre projects, many of which require substantial upgrades to existing power infrastructure.
UK Power Networks declined to comment on individual connection agreements but said several projects were awaiting work on infrastructure beyond its control. “Many data centres, whilst they can connect to our distribution network, are awaiting works on the national transmission network, which we do not own,” the company told AFP.
