Microsoft has withdrawn from a data centre agreement with British cloud infrastructure provider Nscale for a project in Loughton, Essex, following repeated delays linked to electricity supply constraints, The Telegraph reported on Sunday.
The US technology giant, one of Nscale’s two largest customers, recently terminated its agreement for the site, according to the British newspaper. The report did not specify why Microsoft pulled out, and the company had not immediately responded to a Reuters request for comment.
The reported withdrawal comes as data centre developers face growing challenges in securing sufficient electricity to support the expansion of cloud computing and artificial intelligence infrastructure.
According to The Telegraph, the Loughton project has experienced repeated delays, with officials responsible for the UK’s national power grid reportedly telling Nscale that electricity would not be available for the facility until the 2030s.
The delay could complicate plans to develop the site, as data centres require substantial and reliable power supplies to operate the servers and computing systems used to store data, run online services and train artificial intelligence models.
Nscale, however, said the reported setback had not affected its broader relationship with Microsoft or its other business agreements.
“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 company said it remained committed to the Loughton project and the UK market, adding that it was exploring alternative power sources for the site while considering other locations for expansion across the country.
The spokesperson’s comments suggest that Nscale intends to continue pursuing the project despite the reported difficulties securing a timely connection to the electricity grid.
Microsoft’s reported withdrawal is a setback for the project, although the available information does not establish whether the company has abandoned other agreements with Nscale.
The development comes as Nscale expands its business supplying computing infrastructure to companies developing and operating artificial intelligence systems.
The company filed for an initial public offering in the United States last month, according to its prospectus, which identified Microsoft and AI company Anthropic as expected major customers.
Nscale provides infrastructure services that include computing capacity, power, data centres and software for training and running AI models.
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Its facilities support the intensive processing requirements of AI systems, which have driven increased demand for specialised computing infrastructure.
Backed by chipmaker Nvidia, Nscale has expanded rapidly since its launch. Its total contracted value grew from $100 million to more than $103 billion in two and a half years, according to the report.
The company operates in a competitive market that includes AI infrastructure providers CoreWeave, Nebius, Crusoe and Lambda.
The reported difficulties at Loughton highlight a wider challenge facing the data centre industry: securing the electricity needed to support growing demand for cloud services and AI computing.
Although investment in AI infrastructure has accelerated, projects can face delays when electricity connections and other essential infrastructure are not available on the timelines required by developers and their customers.
Nscale said it remained committed to the UK project and was investigating alternative power options, but it did not provide a timeline for the facility’s development.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
