Microsoft has withdrawn from a major artificial intelligence data center project in Loughton, Essex, developed by British cloud infrastructure provider Nscale, amid concerns over electricity supply delays.
The decision, first reported by the Telegraph, represents another setback for a development previously promoted by the British government as the country's largest sovereign AI data center.
The Loughton facility, announced in 2025 and originally scheduled to open in 2027, has faced mounting uncertainty over its development timetable.
According to the Telegraph, national grid officials informed Nscale that electricity supplies for the facility might not become available until the 2030s.
Concerns about the project's progress had already emerged in March, when the Guardian reported that the proposed location remained an operational scaffolding yard.
Microsoft, one of Nscale's largest customers, was expected to serve as the project's anchor tenant.
Its withdrawal leaves the Essex development without a publicly announced customer.
Although the Telegraph did not specify Microsoft's reasons for terminating the agreement, the decision follows reports of repeated delays and significant power infrastructure constraints.
Nscale said it remained committed to developing the Loughton facility and was investigating alternative electricity supplies alongside additional expansion opportunities across Britain.
The company also maintained that its broader commercial relationship with Microsoft remained intact, with the technology giant reportedly continuing its involvement in another Nscale project in Norway.
The setback comes as Nvidia-backed Nscale pursues a US stock market listing, with a potential valuation of $35 billion.
The company filed for an initial public offering last month, identifying Microsoft and Anthropic as expected major customers.
Nscale provides computing infrastructure, electricity capacity, data centers and software supporting artificial intelligence development.
Since its launch, the company says its total contracted value has expanded from $100 million to more than $103 billion within two-and-a-half years.
The Loughton difficulties nevertheless highlight the infrastructure challenges confronting one of Britain's most prominent proposed AI developments.