Microsoft has pulled out of a major AI datacentre project in Loughton, Essex, dealing a setback to a development the UK government had promoted as the country's largest AI datacentre when it was announced in 2025.

Microsoft, which was expected to be the anchor tenant and one of the project's largest planned customers, informed Nscale it was ending its agreement. The move leaves the British company without its only publicly announced customer for the Essex site, first reported by the Telegraph.

The project was already facing difficulties. The Guardian revealed in March that the location was still an operational scaffolding yard, and a month before Microsoft's exit it emerged that power supply problems would delay the site coming online. Nscale said it is exploring alternative power sources for Loughton alongside other UK expansion sites.

A spokesperson said the company remains committed to the project and the UK, adding that its relationship with Microsoft remains strong and long-term and that the "London-wide grid issue" has no impact on other contracts. Microsoft reportedly remains involved in a separate Nscale project in Norway.

The loss of an anchor tenant could complicate Nscale's ambition to float on Wall Street this year at a potential valuation of $35bn. The company, backed by tech firms including Nvidia, has positioned itself as Britain's sovereign datacentre provider.

Source: The Guardian