Microsoft has pulled out of Nscale's planned AI data centre in Loughton, Essex, after concerns that the grid cannot supply enough power until the early to mid-2030s, the Guardian and BBC reported on Sunday, Oct. 18, 2026. The £2 billion project had been billed by ministers as the UK's largest "sovereign" AI data centre.
UK Power Networks, which runs the grid across London and the south-east, had told Nscale it could not deliver enough power until then, the Guardian reported (first detailed by the Telegraph). Microsoft was expected to be the anchor tenant and had said last month that part of a $30 billion UK investment would fund a supercomputer at the site, the BBC wrote. Microsoft declined to comment to the BBC.
What Nscale says
"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," an Nscale spokesperson said. "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts." The two still work together in Norway, Portugal and the United States, the BBC reported.
Nscale is Nvidia-backed and was one of two neoclouds the UK government highlighted in its AI strategy, alongside CoreWeave. The Guardian said the loss of the only publicly named Loughton customer could complicate a planned Wall Street float that had been discussed at a potential $35 billion valuation. Related Tesla angle: Tesla and SpaceX are racing for their own AI compute — see our Terafab talks coverage.
