Microsoft pulls out of UK’s biggest AI data centre plan

By the Editorial Team · Tuesday, October 20, 2026

Microsoft has pulled out of the planned AI data centre in Loughton, Essex, due to power supply constraints that will delay the project's completion until the early to mid-2030s. This withdrawal challenges the UK’s ambitions for AI infrastructure growth, though Nscale remains committed to finding alternative solutions and continuing its broader partnership with Microsoft.

Microsoft has withdrawn from a planned project to develop the United Kingdom’s largest artificial intelligence data centre in Loughton, Essex, citing concerns over power supply limitations. The decision marks a significant setback for the ambitious scheme, which was initially announced last year in partnership with UK-based company Nscale.

Nscale had committed £2 billion to the facility, positioning it as a landmark development in the UK’s AI infrastructure. Former Prime Minister Sir Keir Starmer had previously highlighted the project as part of the country’s AI strategy for 2025. Microsoft was expected to serve as the anchor tenant and had also planned to fund a supercomputer at the site, lending substantial credibility and financial backing to the endeavour.

However, UK Power Networks informed project stakeholders that the required power connection for the data centre would not be available by the originally targeted completion date in 2026. The grid operator identified upstream capacity constraints, with full power availability projected to extend only into the early to mid-2030s. These delays prompted Microsoft to pull out of the Loughton development.

In response, a spokesperson for Nscale affirmed the company’s ongoing commitment to the project and to the UK market more broadly. The statement indicated that Nscale is exploring alternative power solutions for the Loughton site alongside other potential expansion locations within the UK. The firm emphasized that its partnership with Microsoft remains strong and that the grid capacity issue affecting the London area does not impact their collaboration on other initiatives.

Nscale, founded in London and supported by technology firms including Nvidia, is currently preparing for a public listing on the New York Stock Exchange. The company aims for a valuation as high as $35 billion while maintaining its British headquarters. Notably, its board includes prominent figures such as former Deputy Prime Minister Nick Clegg and former Meta executive Sheryl Sandberg. Despite this high profile, Nscale reported a net loss of $1 billion on revenues of $141 million during the first half of the year.

Microsoft issued a statement reaffirming its commitment to the partnership with Nscale and its broader efforts to develop global digital infrastructure. The company clarified that its withdrawal pertains solely to the Loughton project and does not affect other joint ventures or partnerships with Nscale across Europe and the United States.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.