Microsoft had agreed to lease 23,000 Nvidia AI chips at the site and was expected to become its anchor tenant. The project has faced repeated delays, with electricity grid operators reportedly saying power won’t be available until the 2030s. Microsoft has withdrawn from a major UK data centre deal. The decision is a setback for British AI infrastructure developer Nscale, which had planned to make its Loughton, Essex, facility operational next year.
The withdrawal also comes as Nscale prepares for a potential US stock market listing that could value the company at up to $35 billion (£26 billion), raising questions about its expansion plans and investor confidence in AI infrastructure businesses, according to a report by The Telegraph. The deal was part of Microsoft’s broader UK investment commitments worth £22 billion, announced during US President Donald Trump’s visit to the country. The proposed facility would have housed thousands of high-performance Nvidia AI chips. Microsoft recently informed Nscale that it was pulling out of the agreement announced last year.
However, difficulties securing electricity connections have delayed the project, forcing Nscale to look for alternative energy sources and new expansion locations.
Backed by Nvidia and other investors, the company has been privately valued at $15 billion and reportedly targets a valuation of up to $35 billion through the proposed flotation.
An Nscale spokesman said: “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. Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts. Microsoft did not comment on the decision. The setback comes as Nscale considers raising billions of dollars through a potential Wall Street listing.