Microsoft leaves Loughton, and AI capacity waits on the grid

Microsoft confirmed on 19 October that it has pulled out of its agreement with Nscale for an AI data center in Loughton, Essex, a withdrawal first reported by The Telegraph on 18 October. “This decision relates to a single site,” a Microsoft spokesperson said, adding that the company remains “committed to our partnership with Nscale.”

Loughton was the largest site with a stated GPU count in the plan Nscale set out on 16 September 2025. The company said the site would open with 23,040 Nvidia GB300 GPUs in a 50MW facility, scalable to 90MW, with delivery in the first quarter of 2027, and that Microsoft would use it to provide Azure services. Those 23,040 GPUs were part of a plan for up to 58,640 that Nscale described in the same release. Satya Nadella, Microsoft’s chairman and chief executive, said at the time: “Together with Nscale, we are proud to announce the UK’s largest supercomputer, powered by over 23,000 GPUs.” Josh Payne, Nscale’s founder and chief executive, said in the same release that building AI infrastructure was the only way to stay competitive in what he called “the global race”.

In September, The Guardian reported that the local electricity distribution network operator had warned Nscale the grid capacity the site needs might not arrive until the 2030s, as The Register recounts. The operator told The Register it could not discuss individual connections, but said many data centers “are awaiting works on the national transmission network, which we do not own.”

Microsoft has not said why it left. The GPUs were specified, Nscale had pledged £2bn to build the facility, according to City AM, and both companies had a delivery quarter. The grid connection was the one item neither company controlled, and the warning reported by The Guardian put it potentially in the 2030s, years after the planned first quarter of 2027.

A single site, by Microsoft’s account

AFP reported, citing a person familiar with the matter, that Loughton was a small part of Microsoft’s agreements with Nscale. Nscale says the grid issue has no impact on its other contracts and that its “relationship with Microsoft remains strong and long-term.”

According to City AM, Nscale made a net loss of $1bn (£755m) on revenue of $141m (£106m) in the first half of the year, mostly from non-cash charges, and is preparing a New York Stock Exchange listing at a reported valuation of up to $35bn (£26.4bn). AFP reports that Nscale’s listing filing shows a large share of its committed revenue coming from a few customers, Microsoft among them. Loughton now has no publicly announced customer, The Register reports.

It is not the first withdrawal from Nscale’s plans. AFP reports that OpenAI pulled out of a planned ‘Stargate’ partnership with Nscale and Nvidia earlier this year, citing high energy costs among its reasons, according to press reports. Two of the three names on the September 2025 announcement have now stepped back from parts of it, and in both cases energy was part of the explanation reported.

“We remain committed to both the Loughton project and the UK,” Nscale said, adding that it is “exploring alternative power sources for the site” alongside other expansion sites. It has not said which sources, at what cost or on what timetable.

The grid date behind the GPU count

Few mid-market firms lease data center halls or buy GPUs by the thousand. They reach AI compute through a cloud provider’s regions and the AI services sold on top of them. The capacity behind those services is planned years ahead, in announcements like Nscale’s, and each one names chips, megawatts and a quarter.

Microsoft has not said where the Azure capacity once planned for Loughton will now come from, or whether its timing for that capacity has changed. Its statement confines the decision to one site. Nvidia could supply the chips, investors had put money into Nscale, and Microsoft had signed as the customer. None of that produced a working supercomputer without a grid connection, and the local network operator, while declining to discuss individual connections, says many data centers are waiting on transmission works it does not own.

For buyers whose contracts or data policies tie AI workloads to a particular location, the date that matters in any provider’s capacity plan is the date that site gets power. The September 2025 release for Loughton gave a GPU count, a megawatt figure and a delivery quarter, and no grid connection date.

Until Nscale either connects alternative power or finds a tenant willing to wait for the grid, the 23,040 GPUs announced for Essex remain a delivery plan without a customer.