Microsoft quits UK's flagship AI supercomputer project as grid power delayed until 2030s

Microsoft has walked away from its role as the anchor customer at what the UK government had billed as Britain's largest sovereign AI datacentre, after the site in Loughton, Essex was told it may not receive enough electricity from the national grid until the early to mid-2030s — years after the facility was supposed to open.

The withdrawal, first reported by The Telegraph and confirmed across multiple outlets, leaves British AI infrastructure startup Nscale without a single publicly announced customer for the Essex project. Microsoft had been expected to use the facility's computing power for its Azure cloud services, with the first chips arriving in early 2027.

The Loughton project was announced in September 2025 as part of Microsoft's £22 billion UK investment package, with the government of Keir Starmer prominently highlighting it as a centrepiece of Britain's AI strategy. The plan called for 23,040 Nvidia GB300 GPUs packed into a 50MW facility, with room to expand to 90MW.

The project had already attracted scrutiny earlier this year when The Guardian revealed the chosen site was still an operational scaffolding yard. Nscale has since cleared the land — but removing scaffolding has proved considerably easier than securing a power connection.

UK Power Networks (UKPN), which owns and maintains the electricity grid across London and the south-east of England, informed Nscale that sufficient grid capacity would not be available until the early to mid-2030s. UKPN told The Register it could not discuss individual connections under Section 105 of the Utilities Act, but noted in general terms that many datacentres "are awaiting works on the national transmission network which we do not own."

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.— Nscale spokesperson

Microsoft did not respond to requests for comment from any outlet.

The stakes for Nscale extend well beyond one site. The company, which is backed by Nvidia and has positioned itself as Britain's 'sovereign' datacentre provider, had been targeting a Wall Street IPO this year at a potential valuation of $35 billion. The loss of its anchor tenant for the Loughton project could complicate that ambition. Board members include former UK deputy prime minister Nick Clegg, who holds a 0.25% stake that could be worth $88 million at the $35 billion valuation, and former Meta chief operating officer Sheryl Sandberg, according to The Guardian.

Microsoft is understood to remain a partner on a separate Nscale project in Norway, according to The Guardian.

The Loughton collapse reflects a wider crisis in UK grid capacity. Demand for new electricity connections surged from 41GW to 125GW in less than a year, with datacentres accounting for at least 80GW of that demand, according to The Register. Ofgem, the energy regulator, proposed earlier this year charging datacentre developers for connection requests in an attempt to deter speculative projects from clogging the queue. Some UK datacentre developers have turned to on-site gas-powered generation rather than wait years for a grid connection, while others face growing local opposition — residents near Google's Waltham Cross facility complained about noise, lighting and poor consultation at a public meeting in July.

The problem is not unique to Britain. In the United States, public enthusiasm for datacentres is cooling amid concerns about electricity costs and environmental impacts. But the UK's situation is particularly acute for a government that has staked part of its economic growth story on AI investment — official figures show AI-related investment is among the factors helping Britain's economy outperform expectations this year.

Nscale says it is investigating whether it can generate power on-site and whether it can accelerate the grid connection process. Whether those options can replace a committed anchor customer — and satisfy investors ahead of a planned IPO — remains an open question.

Why it matters — Britain's ability to build the AI infrastructure its government has promised as an economic growth engine now depends on solving an electricity grid backlog that, by the regulator's own account, could take until the 2030s — and the collapse of the country's flagship AI datacentre project shows that money and political will alone cannot fix it.

Reported by theguardian.com, reuters.com, theregister.com