Microsoft (NASDAQ: MSFT) has reportedly walked away from the Loughton, Essex, data center agreement it entered into with Nscale during the September 2025 state visit of US President Donald Trump to the UK, citing potential power delays to the facility into the 2030s, per the Telegraph.
Microsoft was supposed to be the headline name of the AI investment push led by UK Prime Minister Keir Starmer.
The withdrawal now adds to earlier halts to the Stargate UK project plans in April 2026. That joint OpenAI and Nvidia venture was unveiled the same week King Charles hosted President Trump in September 2025.
Why did Microsoft walk away from UK deal with Nscale?
Neither Microsoft nor Nscale have publicly commented on why they halted plans for the Loughton data center project, even though the UK’s electricity bottleneck is being fingered as the big issue.
Per reports, Nscale heard from UK Power Networks, which serves the Essex and greater London areas, that any 90-megawatt connection could not be guaranteed by the operator until the early-to-mid 2030s.
The 2033 or 2034 connection date does not fit the timeline of an anchor tenant like Microsoft, which runs continuous Azure upgrade cycles.
Per Reuters, an Nscale spokesperson insisted that the firms maintain a “strong and long-term” relationship, “and this unfortunate London-wide grid issue has no impact on our other contracts.” They added that the company is “exploring alternative power sources for the site.”
The power grid headache is not unique to Nscale, with the Office of Gas and Electricity Markets (Ofgem) estimating roughly 315 data center projects on the connection queue. More than 100 projects are exploring gas generation as a stop-gap solution to avoid prolonged power delays.
When Microsoft announced its $30 billion UK investment last year, the company said it was building “the country’s largest supercomputer” with Nscale.
Microsoft’s chairman and CEO Satya Nadella echoed those sentiments, saying that the two firms were “building the digital infrastructure for the AI era”
Nscale detailed that the Loughton site was designed for 23,040 Nvidia GB300 chips and 50 megawatts of capacity, scalable to 90 megawatts in its September 2025 announcement. The first GPUs were due Q1 2027.
Starmer talked up the commitment as “a powerful vote of confidence” in UK AI from Microsoft.
Why the IPO is now exposed
Microsoft’s departure throws a curveball at Nscale, which filed for a US listing on the New York Stock Exchange under the NSCL ticker. The firm is targeting a raise of up to $3 billion at a $35 billion valuation.
Per the company’s IPO filing, Microsoft and Anthropic combine for about 85% of Nscale’s contracted backlog, and one customer accounted for 52% of first-half 2026 revenue.
Nscale’s problems are compounded by its flagship Norway site running behind schedule, with only a fraction of the planned capacity live.
CoreWeave shares dropped more than 25% on financing worries, and Australian neocloud Firmus abandoned its own IPO after weak investor demand.
The Stargate UK echo
The Loughton exit has drawn parallels with Stargate UK, the OpenAI, Nvidia and Nscale project announced alongside Microsoft’s pledge. OpenAI paused it in April 2026, citing regulation and energy costs.
A Guardian investigation later found OpenAI never appears to have visited the flagship Cobalt Park site in North Tyneside, and that £20 billion of the “potential” £30 billion touted by ministers was hypothetical.
One source told the paper Nscale “were pretty much told to back the Stargate project, and it caught them completely unaware.”
Two of the biggest deals from Starmer’s AI week have now lost their American anchors to the same wall: not politics, but physical infrastructure.
The smartest crypto minds already read our newsletter. Want in? Join them.