Microsoft pulls out as anchor tenant of Nscale's Loughton AI data centre in Essex, the UK government's flagship 'sovereign AI' site, after grid operators said power won't arrive until the 2030s

Why it matters

【Key points】

The Telegraph reported on October 18 that Microsoft has ended its deal to anchor Nscale's AI data centre in Loughton, Essex, where it was to rent about 23,000 Nvidia chips; it was the site's only announced customer. The site was due online next year, but grid operators say power won't come until the 2030s.

Nscale told Reuters and The Guardian: "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts." It says it is still committed to Loughton and is looking at alternative power. Microsoft has not commented. The Guardian says Microsoft remains in an Nscale project in Norway.

The deal was part of Microsoft's £22bn UK pledge during Trump's state visit; ministers called it the "largest UK sovereign AI datacentre". Per the Telegraph, Microsoft provides over 40% of Nscale's $103bn contracted revenue (the UK deal is a small part), Anthropic is another big customer, and Nscale is pursuing a US listing at up to $35bn. X posts rose to about 60 an hour by evening.

【Verifiable】

The Guardian: https://www.theguardian.com/uk-news/2026/oct/18/microsoft-drops-huge-ai-datacentre-project-in-essex-over-power-supply-concerns

The Telegraph: https://www.telegraph.co.uk/business/2026/10/18/microsoft-axes-ai-deal-setback-uk-data-centre-pioneer/

Reuters via CNA: https://www.channelnewsasia.com/business/microsoft-pulls-out-uk-data-center-deal-nscale-telegraph-reports-6469486

【Our read】

1. Media reports plus Nscale's indirect confirmation; Microsoft is silent, and the grid explanation is Nscale's.

2. In the UK, power, not chips, is the binding constraint. The government's showcase site lost its only customer over a grid connection, raising questions for other AI Growth Zones.

3. Neoclouds finance on anchor leases; losing one at a flagship site before an IPO will put Nscale's contract concentration under scrutiny.