Microsoft Withdraws From Nscale’s UK Data Centre Project Amid Power Delays

Microsoft has withdrawn from a deal with British artificial intelligence infrastructure provider Nscale to develop a data centre in Loughton, Essex, according to a report by The Telegraph. The reported exit comes as Nscale prepares for a potential US initial public offering (IPO), adding uncertainty to its expansion plans amid delays in securing electricity supplies.

The US technology giant, one of Nscale’s two largest customers, recently terminated its agreement for the proposed facility, where it was expected to become the anchor tenant, according to the report published on Sunday, October 18. The reason for Microsoft’s withdrawal has not been disclosed.

The project has faced repeated delays, with national grid officials reportedly indicating that the facility might not receive an electricity connection until the 2030s. The uncertainty over power availability has raised questions about the project’s development timeline and its ability to meet the growing demand for computing infrastructure.

Nscale, however, said its relationship with Microsoft remained strong and long-term. The company also said the electricity grid issue would not affect its other contracts and reiterated its commitment to the Loughton project and the UK. It is exploring alternative power sources for the site, alongside other expansion opportunities in the country.

The setback comes as Nscale pursues a potential listing in the United States. The company filed for an IPO last month, with Microsoft and AI startup Anthropic expected to be among its major customers, according to its prospectus.

Nscale provides computing infrastructure, power, data centres and software used to train and run artificial intelligence models. Backed by Nvidia, it competes with companies including CoreWeave, Nebius, Crusoe and Lambda. Its total contracted value reportedly grew from $100 million to more than $103 billion in two-and-a-half years.

The company is also facing execution challenges elsewhere. Its flagship data centre in Norway is approximately six months behind schedule, with only 6.4 megawatts of its planned 30-megawatt capacity operational, according to a recent report by Bloomberg.

These developments could draw greater investor scrutiny as Nscale advances its listing plans. The reported withdrawal also highlights the importance of reliable electricity infrastructure to the rapid expansion of AI data centres, where delays in power connections can affect construction schedules and commercial commitments.