Microsoft reportedly walks away from Nscale's Loughton supercomputer — and the grid is the real story

Microsoft has reportedly pulled out of its contract as anchor tenant for Nscale’s data centre in Loughton, Essex — a roughly $2.7bn (£2bn) site billed as the UK’s largest AI supercomputer. The termination was reported by The Telegraph; Microsoft declined to comment and gave no public reason, and neither company has tied the decision to the problem hanging over the project. But that problem is worth dwelling on, because it is the one that increasingly defines what the UK can and cannot build.

What was promised

The Loughton supercomputer was the centrepiece of a $30bn (£22bn) Microsoft pledge made in September 2025, timed to the US president’s state visit, with Microsoft as the anchor customer for a facility designed around 23,040 Nvidia GB300 GPUs drawing 50 megawatts, scalable to 90. Satya Nadella said the partners would build “the UK’s largest supercomputer.” It was exactly the kind of headline commitment the UK has been courting.

Why the grid is the real story

Here is the detail that matters more than the corporate manoeuvring: grid officials reportedly told Nscale the Loughton site would not get the electricity it needs until the 2030s. The opening had already slipped from the end of 2026 to 2027. A data centre you cannot power is not a data centre, however many GPUs are specced for it.

No one has formally connected Microsoft’s exit to the power timeline, and we should not either. But the timing frames the week: the binding constraint on Britain’s AI build-out is turning out to be not chips, not capital, but electricity and the queue to connect to the grid. Ofgem’s own figures show the UK’s data-centre connection queue tripling from 41 GW to 125 GW in barely half a year. You can announce £22bn of supercomputers; you cannot announce the substations to run them.

Nscale’s position

Nscale, which we have followed as one of the UK’s most aggressive AI-infrastructure players — from its $100bn-plus contracted backlog to its US IPO plans — is playing it down. It told Reuters that “this unfortunate London-wide grid issue has no impact on our other contracts,” described its Microsoft relationship as “strong and long term,” and said it remains committed to Loughton and is exploring alternative power, reportedly including on-site gas fuel cells from Bloom Energy. It is not the first wobble at the top of the UK’s data-centre ambitions: OpenAI paused its Stargate UK plans in April, and capacity at a separate Nscale site in west London reportedly went to Google.

Why it matters

The UK has staked a great deal on becoming a place where frontier AI is built, not just used — the thrust of its sovereign-AI programme and the subject of a stark warning from the government’s own science advisers this week. A supercomputer that cannot be powered until the 2030s is a concrete reminder that sovereignty in AI is not only about models and chips; it is about planning permission, grid connections and megawatts. That is a harder, slower, more municipal kind of problem than a funding round — and it is where the UK’s AI ambitions will actually be won or lost. Companies like Salience Labs, raising to make data centres do more with the power they have, are chasing the same constraint from the other end.