Microsoft has withdrawn from a flagship UK artificial intelligence data centre agreement with Nscale, originally announced during President Donald Trump’s September 2025 state visit and championed by Prime Minister Keir Starmer. The Loughton, Essex project was intended to anchor a $30 billion UK investment push and to host 23,040 Nvidia GB300 chips, with capacity of 50 megawatts scalable to 90 megawatts and first GPUs expected in Q1 2027.
The reported reason is power infrastructure: UK Power Networks, which serves Essex and greater London, indicated that a 90-megawatt connection could not be guaranteed until the early-to-mid 2030s. A 2033 or 2034 grid timeline does not fit Microsoft’s continuous Azure upgrade cycles. Ofgem estimates roughly 315 data centre projects are in the connection queue, with more than 100 exploring gas generation as a stop-gap. An Nscale spokesperson said the companies maintain a “strong and long-term” relationship and that “this unfortunate London-wide grid issue has no impact on our other contracts,” adding that Nscale is exploring alternative power sources.
The withdrawal complicates Nscale’s planned US IPO on the New York Stock Exchange under ticker NSCL, targeting up to $3 billion at a $35 billion valuation. According to its filing, Microsoft and Anthropic represent about 85% of Nscale’s contracted backlog, and one customer accounted for 52% of first-half 2026 revenue. Nscale is also dealing with delays at its Norway site, while data centre sentiment has weakened: CoreWeave shares dropped more than 25% on financing worries, and Australian neocloud Firmus abandoned its IPO.
The episode echoes Stargate UK, the OpenAI, Nvidia and Nscale project announced alongside Microsoft’s pledge. OpenAI paused it in April 2026, citing regulation and energy costs, and a Guardian investigation later found OpenAI apparently never visited the Cobalt Park site and that £20 billion of the touted £30 billion was hypothetical. A 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 physical infrastructure rather than politics.
