Microsoft pulls out of AI datacentre project in Essex over power supply concerns

Microsoft has withdrawn from a planned large-scale artificial intelligence (AI) datacentre at Loughton in Essex, England, over doubts about electricity supply. The project is being developed by British company Nscale, which has now lost the only customer it had publicly announced for the site. The setback could also affect the UK government's efforts to build up its own AI infrastructure.

What was planned

Datacentres are often described as the central nervous system of AI technology such as chatbots. Ministers presented the Loughton facility in 2025 as the country's largest AI datacentre. Keir Starmer's government cited it when launching the UK's AI strategy, calling it the largest UK sovereign AI datacentre. It was due to open next year.

Microsoft was one of the largest planned customers and was expected to be the anchor tenant. The end of the agreement was first reported by the Telegraph.

Earlier problems

Doubts about the scheme had already surfaced. In March the Guardian revealed that the site was still an operational scaffolding yard. A month ago it emerged that power supply problems meant the project would face a long wait before it could come online.

It is understood that Microsoft remains involved in another Nscale project, in Norway.

Impact on the company

Nscale, which is backed by technology companies including Nvidia, presents itself as Britain's "sovereign" datacentre provider. Losing an anchor tenant could undermine its ambition to list on Wall Street this year at a potential valuation of $35bn (£26bn).

An Nscale spokesperson said the company remains committed to the Loughton project and to the UK, and is exploring alternative power sources for the site as well as other expansion sites in the country. The spokesperson added that the relationship with Microsoft remains strong and long-term, and that the London-wide grid issue has no effect on the company's other contracts.