Microsoft pulls out of UK's largest planned AI data centre in Essex

Nscale says it remains committed to the Loughton project despite grid delay and Microsoft's exit

By LineZotpaper

Published19 October 2026

Read Time2 min

Sources2 outlets

Microsoft has terminated its involvement in what was set to be the UK's largest AI data centre in Loughton, Essex, leaving developer Nscale to proceed alone. Nscale says it is exploring alternative power sources and that its wider partnership with Microsoft remains intact.

The future of the UK's largest proposed AI data centre has been thrown into doubt after Microsoft pulled out of the project in Loughton, Essex. Nscale, the company behind the £2bn facility, said it still plans to build and open the centre, but confirmed that Microsoft, which had agreed to fund a supercomputer at the site, has ended its involvement.

A Nscale spokesperson said the firm was exploring alternative power sources for the site and that its relationship with Microsoft remained strong for other joint projects overseas. Microsoft declined to comment.

"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," Nscale said. "Our relationship with Microsoft remains strong and long-term."

The data centre was due to receive its power supply at the end of the year, but as first reported by the Telegraph, Nscale has been told this will not happen until the 2030s. Nscale said the delay was a "London-wide grid issue" and that it had no impact on its other contracts.

Nscale and Microsoft are still working together on projects in Norway, Portugal and the United States. The Loughton site is expected to create 250 permanent jobs when it eventually opens.

Just last month, Microsoft announced that part of the $30bn (£22bn) it was investing in the UK would go towards funding the Loughton supercomputer.

Analysis

Why This Matters

This setback raises questions about the pace of UK AI infrastructure development, which the government has touted as a priority for economic growth and technological leadership.
The grid connection delay, stretching into the 2030s, highlights broader challenges in powering large-scale AI data centres across the UK.
The project's future jobs and investment, including 250 permanent roles, are now uncertain, affecting the local Essex economy.

Background

The Loughton project was announced in early 2025 as a £2bn investment to create a pioneering AI facility, with plans for hundreds of jobs. Microsoft had pledged to fund a supercomputer at the site as part of a larger $30bn UK investment. The venture was seen as a flagship for the UK's ambitions to become a major AI hub, with industry figures such as Nvidia's boss predicting the country would be an 'AI superpower'. However, power supply constraints have emerged as a recurring obstacle for large-scale data centres.

Key Perspectives

Nscale: The developer insists it remains fully committed to the Loughton site and the UK market, and is seeking alternative power sources. It characterises the Microsoft exit as not affecting their broader relationship.

Microsoft: The company has not publicly explained its withdrawal, declining to comment. Its continued investment in other UK projects suggests the decision may be specific to this site.

Critics/Skeptics: Grid infrastructure delays and a major partner pulling out could undermine confidence in the project's viability, potentially delaying or scuppering the facility and its promised jobs.

What to Watch

Whether Nscale secures an alternative power supply or grid connection arrangement for the Loughton site.
Any further announcements from Microsoft about its UK investment plans, given its recent $30bn pledge.
The timeline for grid upgrades in London, which will determine if the 2030s date moves earlier or later.

Sources

Microsoft pulls out of UK's largest AI data centre · BBC News
Microsoft pulls out of UK's largest AI data centre · BBC News

Checked

12 claims in this story checked against 1 source: 11 supported.

Show each claim

SupportedMicrosoft pulls out of UK's largest planned AI data centre in EssexBBC News: “Microsoft pulls out of UK's largest AI data centre. ... Microsoft, which said it would fund a supercomputer at the site, has terminated its involvement.”
SupportedNscale says it remains committed to the Loughton project despite grid delay and Microsoft's exitBBC News: “We remain committed to both the Loughton project and the UK... this will not happen until the 2030s.”
Not in the sourcesThe future of the UK's largest proposed AI data centre has been thrown into doubt after Microsoft pulled out of the project in Loughton, Essex.BBC News: “A tech company has said it still plans to build the UK's largest AI data centre despite Microsoft pulling out of the project.”
SupportedMicrosoft has terminated its involvement in what was set to be the UK's largest AI data centre in Loughton, Essex, leaving developer Nscale to proceed alone.BBC News: “Microsoft... has terminated its involvement.”
SupportedNscale says it is exploring alternative power sources and that its wider partnership with Microsoft remains intact.BBC News: “A spokesperson for Nscale said it was exploring alternative power sources and its relationship with Microsoft remained strong for their other projects together overseas.”
SupportedNscale, the company behind the £2bn facility, said it still plans to build and open the centre, but confirmed that Microsoft, which had agreed to fund a supercomputer at the site, has ended its involvement.BBC News: “Nscale announced last year it had pledged £2bn to build and open... Microsoft, which said it would fund a supercomputer at the site, has terminated its involvement.”
SupportedWe 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," Nscale said.BBC News: “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,”
SupportedOur relationship with Microsoft remains strong and long-term.BBC News: “Our relationship with Microsoft remains strong and long-term.”
SupportedThe data centre was due to receive its power supply at the end of the year, but as first reported by the Telegraph, Nscale has been told this will not happen until the 2030s.BBC News: “The data centre was due to receive its power supply at the end of the year. But as first reported by the Telegraph on Sunday, external, Nscale has been told this will not happen until the 2030s.”
SupportedNscale said the delay was a 'London-wide grid issue' and that it had no impact on its other contracts.BBC News: “This unfortunate London-wide grid issue has no impact on our other contracts," Nscale told the BBC.”
SupportedThe Loughton site is expected to create 250 permanent jobs when it eventually opens.BBC News: “The Loughton site is expected to create 250 permanent jobs when it eventually opens.”
SupportedJust last month, Microsoft announced that part of the $30bn (£22bn) it was investing in the UK would go towards funding the Loughton supercomputer.BBC News: “Only last month, Microsoft announced that some of the $30bn (£22bn) it was investing in the UK would be used to fund the Loughton supercomputer.”