Microsoft has withdrawn from a data centre agreement with British cloud infrastructure provider Nscale for a project in Loughton, Essex, according to a report published by The Telegraph on Sunday.
The US technology giant, identified as one of Nscale’s two largest customers, recently terminated its agreement for the facility, the newspaper reported. It did not specify why Microsoft withdrew from the project.
Microsoft declined a request from Reuters for comment.
Power Supply Delays Raise Questions
According to The Telegraph, the Loughton project has faced repeated delays, with officials responsible for the national electricity grid reportedly telling Nscale that a power supply for the data centre was not expected until the 2030s.
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An Nscale spokesperson said the company’s relationship with Microsoft remained strong despite the reported withdrawal.
“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts,” the spokesperson told Reuters.
The company also reaffirmed its commitment to the Loughton project and its wider UK operations, saying it was exploring alternative power sources for the site, alongside other potential expansion locations across the country.
Nscale Pursues Growth Amid AI Demand
Nscale filed for an initial public offering (IPO) in the United States last month, according to its prospectus, which identified Microsoft and Anthropic as expected major customers.
The company provides infrastructure for artificial intelligence, including computing capacity, power, data centres and software used to train and run AI models.
Backed by Nvidia, Nscale has expanded rapidly since its launch and competes with AI infrastructure providers including CoreWeave, Nebius, Crusoe and Lambda.
According to the figures cited in the report, Nscale’s total contracted value grew from $100 million to more than $103 billion in approximately two and a half years.
The reported Microsoft withdrawal highlights the challenges of developing large-scale AI infrastructure, where access to electricity and the availability of suitable sites can affect project timelines.
Nscale said it remained committed to the Loughton development and was assessing alternative power options.
