Microsoft Pulls Out of Essex AI Datacentre Over Power Fears

By Olivia Hart

Microsoft has walked away from the Loughton datacentre project in Essex, citing concerns about power supplies, in a fresh setback for the artificial intelligence build-out the UK government has promoted most loudly.

The project's developer is Nscale, a British firm. Ministers heralded the site as the country's largest AI datacentre when they announced it in 2025. The facility was scheduled to open next year. Now its anchor tenant is gone.

Why did Microsoft leave?

The company's stated reason is power supply — the single input an AI datacentre cannot work around. Training and running large AI models consumes electricity at a scale that ordinary commercial buildings do not approach, and a site without a credible grid connection is, for a hyperscaler, effectively unusable.

Microsoft has not, on the face of the available reporting, said publicly whether it sought an alternative site, secured replacement capacity elsewhere, or expects to return. Those silences matter. An anchor tenant's exit usually signals that the operator's power timeline slipped beyond what the customer could tolerate.

The takeaway in plain words: the project's problem is not demand for AI computing but the electricity to run it.

What was promised in 2025?

When the government announced the development in 2025, it framed Nscale's Loughton site as the largest AI datacentre in the country — a flagship for Britain's ambitions in the sector. That framing now sits uneasily beside the departure of the tenant meant to occupy it.

The project was due to open next year. Whether that timetable survives the loss of Microsoft is not addressed in the reporting so far. Nscale has not publicly named a replacement tenant.

The takeaway: a headline superlative from 2025 now carries an asterisk.

What does this mean for the UK's AI plans?

The government championed this site as proof that Britain could host AI infrastructure at scale. Microsoft's exit, over the most basic operational constraint, tests that claim. Grid capacity, not planning permission or capital, appears to be the binding limit.

It is worth noting what has not happened. The project has not been cancelled. Nscale retains the site, and ministers' 2025 designation stands on paper. But a record-setting datacentre without its anchor tenant is a building waiting for a purpose, and the industry will read the power-supply rationale as the signal.

The question for the months ahead is whether Nscale can land another hyperscale tenant on the promised timetable — and whether the UK grid can deliver what the sales brochure assumed.