Microsoft drops Nscale Essex data centre as grid power slips to 2030s

Key takeaways

• Microsoft has quit its deal to rent 23,000 Nvidia AI chips at Nscale's data centre in Loughton, Essex.
• Grid operators told Nscale the site may not get power until the 2030s. It was meant to open next year.
• The blow comes as Nscale prepares a stock market listing that could value it at up to $35bn.
• Nscale says it is looking for other power sources. Watch whether it finds them, and when.

What happened

Microsoft has pulled out of its agreement to rent 23,000 Nvidia AI chips at Nscale's data centre in Loughton, Essex. The Telegraph reported the news, in a story carried by Yahoo Finance UK. Microsoft was the site's only announced customer.

The problem is electricity. Grid operators, the companies that run the power network, have told Nscale they do not expect to supply the site until the 2030s. It was originally meant to come online next year.

Why the deal mattered

The deal was part of a £22bn UK investment package. Microsoft announced it last year during Donald Trump's state visit. Ministers had held up the Essex project as a sign of Britain's AI ambitions.

Microsoft is one of Nscale's two largest customers. It accounts for more than 40% of Nscale's $103bn in contracted revenue, the income already signed in customer deals. The UK lease is believed to be only a small part of that. Anthropic is another major customer. Microsoft did not comment.

Bad timing for Nscale

Nscale is a neocloud, a newer company that rents out AI computing power. It is valued privately at $15bn. It is preparing to list its shares on Wall Street, in a sale that could value it at up to $35bn.

The market is rough. AI infrastructure stocks have fallen. Rival neoclouds such as CoreWeave and Nebius have seen their shares and bonds drop. Australian developer Firmus cancelled a $20bn share listing this month. Nscale has also reportedly faced delays and penalties at a major site in Norway.

Nscale's response

Nscale said it is still committed to Loughton. It is looking at other power sources for the site, and at other UK sites. It blamed a London-wide grid problem and said its other contracts are not affected.

What to watch next

Nscale has not said where other power would come from, or when. The case follows OpenAI pausing a planned Stargate facility with Nscale on Tyneside in April, over high UK electricity prices. Together, they suggest that grid connection dates, not chip supply, now limit how much AI computing Britain can build.