Microsoft cancels UK data centre lease over power
Microsoft has pulled out of a lease agreement for computing capacity at a UK site after authorities warned that electricity may not be available until the 2030s.
The tech giant was set to lease servers from Nscale in Loughton, Essex, but a delay in connecting the facility to the national grid prompted the exit.
Grid officials told the cloud firm that power could be delayed for a decade, making the planned deployment untenable. They added that the timeline reflects current constraints on new high-capacity connections.
Under the original plan, roughly 23,000 of Nvidia’s GB300 chips would have powered a 50-megawatt installation, slated to become the country’s largest AI supercomputer.
The prime minister hailed the venture as a flagship investment to boost the nation’s AI ambitions.
Project Details and Stakeholder Responses
The provider says the termination will have a limited effect on the broader project and that it remains committed to the Loughton site and the local market. Nscale indicated it will continue to develop the campus while seeking alternative partners.
It is exploring alternative energy sources while confirming that other contracts with the tech giant and with Anthropic stay intact.
With the lease withdrawn, the cloud firm now faces the task of finding new tenants for the full 50 MW capacity.
Read Also: China’s AI Boom Stumbles Over Chip Shortage
The company is preparing for a U.S. listing and has built a “neocloud” model that finances AI chips through borrowed capital and then leases compute to AI firms.
Nvidia’s chief executive previously praised the firm as a potential UK unicorn, but infrastructure rollout has lagged. He noted that reliable power is as critical as chip supply for scaling AI services.
As of August, only 25,000 advanced AI chips were operating, about 5% of an original target of 500,000, and progress at a Norwegian site has also stalled. The shortfall highlights the difficulty of matching hardware deployment with grid capacity.
Wider Industry Implications
Ofgem reports that roughly 315 facilities across the country await grid connections, with a combined demand of 73 GW, exceeding the nation’s peak demand of 45 GW. The regulator warned that many new data centres will compete for limited capacity.
Investor sentiment is cooling; an Australian AI-focused firm withdrew its IPO, while shares of U.S. and Dutch peers have slipped sharply. Market analysts attribute the pullback to uncertainty over energy availability.
Nscale said it will seek other collaborators and continue to develop its renewable generation options, aiming to reduce reliance on the national grid.
Anthropic confirmed that its agreement with the cloud provider remains unchanged and it will continue to run its models on the existing hardware while evaluating alternative sites.
