Microsoft pulls out of giant Essex AI data centre amid fears of a power crisis

Microsoft has walked away from a planned giant artificial intelligence (AI) data centre project in Essex, United Kingdom, due to concerns over electricity supply. The project, built by the British firm Nscale, had been presented by UK government ministers as the country's biggest AI data centre.

The project was scheduled to launch next year in the Loughton area of Essex. At the time of its announcement in 2025, it was described as the country's largest AI data centre.

However, doubts about the project had arisen earlier. Last March it became known that the proposed site was still being used as a working scaffolding yard.

A month before that, news also emerged that the project would face a long wait to launch because of electricity supply problems. Against that backdrop, Microsoft has informed the company that it is walking away from the deal. The news of the contract cancellation was first published by The Telegraph.

Microsoft was one of the project's biggest planned customers and prospective main tenant (anchor tenant). With its departure, Nscale lost the only publicly announced customer for this Essex data centre. However, Microsoft is reportedly still involved in another Nscale project in Norway.

Prime Minister Keir Starmer's government had particularly highlighted the Loughton project when announcing the UK's AI strategy in 2025 and described it as 'the UK's largest sovereign AI data centre'. Data centres act as the central nervous system of AI technologies such as chatbots.

Nscale, which has the backing of technology firms including Nvidia, has established itself as Britain's 'sovereign' data centre provider. But losing the main tenant of the Loughton project could damage its ambition of listing on Wall Street this year at a possible valuation of 35 billion dollars (about 26 billion pounds), it is thought.

An Nscale spokesperson said they remain committed to the Loughton project and to the UK and are looking for alternative power sources for the site; alongside, work is also under way on further expansion sites in the UK.

The spokesperson also said their relationship with Microsoft is strong and long-term, and that the impact of this grid problem across London will not affect their other contracts.

Whether the project regains momentum if an alternative power source is found is now the thing to see. For now, uncertainty over electricity supply has left the future of the UK's most talked-about AI infrastructure project hanging.