Microsoft Withdraws From Nscale Data Centre Deal in the UK
Microsoft reportedly withdraws from a data centre agreement with UK AI infrastructure firm Nscale.
Microsoft has withdrawn from a data centre agreement with British cloud infrastructure provider Nscale for a project in Loughton, Essex, according to a report by The Telegraph.
The report said Microsoft, one of Nscale’s two largest customers, recently terminated its agreement for the facility. However, it did not specify why the US technology company decided to withdraw.
Microsoft declined a request for comment from Reuters.
Power Supply Delays Affect Project
The Telegraph reported that the Loughton project had faced repeated delays. National grid officials reportedly told Nscale that a power supply for the data centre might not be available until the 2030s.
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The delays highlight the challenges facing data centre developers as demand for artificial intelligence infrastructure increases. These facilities require substantial and reliable electricity supplies to support computing workloads.
Despite Microsoft’s withdrawal, Nscale said its broader relationship with the company remained strong.
“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts,” an Nscale spokesperson told Reuters.
The spokesperson added that the company remained committed to the Loughton project and the UK. Nscale is also exploring alternative power sources for the site and considering other expansion locations across the country.
Nscale Expands AI Infrastructure Business
Nscale provides infrastructure for artificial intelligence, including computing capacity, power, data centres and software used to train and run AI models.
The company has expanded rapidly since its launch and competes with providers such as CoreWeave, Nebius, Crusoe and Lambda.
According to its prospectus, Nscale filed for an initial public offering in the United States in September 2026. Microsoft and Anthropic were expected to be among its major customers.
The company’s growth reflects increasing demand for infrastructure capable of supporting advanced AI systems. However, securing sufficient electricity and delivering large-scale data centre projects remain significant challenges for the sector.
Nscale says it intends to continue developing the Loughton site despite the reported withdrawal, while exploring alternative ways to secure the power needed for the project.
