# Microsoft leaves Nscale's Essex site as the grid runs out

> Microsoft has reportedly pulled out of Nscale's flagship UK AI data centre because the power will not arrive until the 2030s. A separate audit of US moratoriums suggests that wires, more than vetoes, decide how fast AI capacity gets built.

- URL: https://ai-news-daily.xyz/posts/microsoft-leaves-nscales-essex-site-as-the-grid-runs-out/
- Published: 2026-10-19
- Tags: business, hardware, policy
- Author: AI-generated (this text was generated by AI; see https://ai-news-daily.xyz/about/#ai-disclosure)
- Publisher: [AI News Daily](https://ai-news-daily.xyz/)

Imagine a connections planner at a regional electricity network, the kind of person who has never appeared in an AI press release. It is a Monday, and her queue holds an application for 90 megawatts at a cleared scaffolding yard on the edge of London. She opens the load study. The site is fine. The substation is fine. The transmission network upstream, which she does not control, is the part that has no room. She writes the date she can offer, and it is not a year but a decade. This planner is invented for this article, but the sentence she writes is close to what the Guardian reports a network operator told the developer.

## A tenant leaves, and the reason is power

On 18 October the Guardian reported that Microsoft had pulled out of the Loughton data centre in Essex, which the British developer Nscale is building. The government had presented it in 2025 as the "largest UK sovereign AI datacentre". Microsoft was expected to be its anchor tenant, and with its exit Nscale has lost the only publicly announced customer for the site, the paper says. The Telegraph reported the departure first. The reason is the paper's reading, and Microsoft did not comment to the Telegraph or, at first, to Bloomberg. The Guardian understands that Microsoft stays on for another Nscale project, in Norway.

The cause is not mysterious. On 24 September the Guardian reported that UK Power Networks, the company that would connect the site, had reportedly told Nscale the grid could not supply enough power until the early to mid-2030s. The site had been due to open in 2027 and is seeking up to 90 megawatts, which the paper equates to the consumption of about 315,000 homes. UK Power Networks declined to discuss the project but said that "many datacentres, whilst they will connect to our distribution network, are awaiting works on the wider national electricity transmission network before they can begin operation".

Nscale says it remains committed to Loughton and to the UK, is exploring other power sources and other sites, and describes its relationship with Microsoft as "strong and long-term". Its spokesperson called the problem a "London-wide grid issue" with no effect on its other contracts.

## A customer base with two names on it

The departure matters beyond Essex because of who else depends on Nscale. The Next Web, citing the company's IPO filing, reports that Microsoft and Anthropic make up about 85 percent of its contracts. Anthropic agreed in August to spend $45 billion on Nscale compute over six years. Nscale is seeking to raise as much as $3 billion in an IPO as soon as this month, and the Guardian puts the flotation valuation it is aiming for at $35 billion.

The same report describes the flagship site in Norway as six months behind schedule, with 6.4 megawatts running of a planned 30. It also notes that CoreWeave shares fell 25 percent last week, their worst week since November, and that Australia's Firmus shelved its own IPO after failing to win enough support. The Guardian adds that critics see so-called neoclouds, which borrow heavily to build for the AI boom, as a vulnerability in the wider AI economy. That is the paper's framing of a debate, not a measured result. What the documents do show is a financed business whose revenue depends on buildings that cannot yet be switched on.

## The queue is the product

Loughton is not an outlier in Britain's queue. In June the regulator Ofgem revealed that 315 data centres were waiting to connect to the National Grid, representing 73 gigawatts of demand, against a national peak of 45 gigawatts, the Guardian reports. On 29 July Ofgem opened a consultation on speculative projects, noting that applications for demand connections had grown from 41 to 125 gigawatts in under a year, with data centres accounting for at least 80 gigawatts of that. It proposes a commitment fee of between £237,500 and £712,500 per megawatt, refunded when a project is energised and forfeited if it leaves the queue early. Its director for energy system design, Eleanor Warburton, said the aim was to stop speculative projects taking up space that ready ones need.

The logic of a fee is that a queue place is scarce and some of those holding one will never build. The regulator's own wording says a long queue gives "misleading signals" about how much capacity the country needs. For a developer with a signed tenant and a financed shell, that is cold comfort: the fee protects the queue, and the wait remains.

## What the American audit found

Across the Atlantic the worry has been political rather than electrical. Local resistance to data centres has produced hundreds of moratoriums, and the common assumption is that they are choking the build-out. SemiAnalysis, an industry research firm, set out to test that. Its analysts, Maya Barkin, Reyk Knuhtsen, Jeremie Eliahou Ontiveros and Dylan Patel, tracked more than 400 local instruments across 17 states and mapped them against a pipeline of more than 6,000 facilities, using property records, permits, power data, public-records requests and satellite imagery.

Their conclusion, which is one firm's estimate from a model only partly visible to non-subscribers, is that about 20 gigawatts sits inside restricted boundaries but only 1,525 megawatts slips locally. Including New York's pause on environmental permits, they put the nationwide delay at about 2.3 gigawatts, against roughly 38 gigawatts of US capacity they expect in 2027, of which 22 gigawatts is already under vertical construction. Most moratoriums freeze new applications and do not revoke existing approvals. Some expire before later projects need a permit. Some miss the parcel: Michigan has 45 enacted moratoriums and, in the firm's count, effectively no pipeline exposure, and a Texas project was moved outside a moratorium's reach when 444 acres were removed from a city's limits.

The authors do not say the risk is zero. They write that moratoriums "could" delay the build-out but "aren't yet at scale", and that a strict statewide ban reaching even off-grid projects would worry them. Tom's Hardware, summarising the work on 18 October, adds a reporter's field impression from The Economist, that the moratoriums are "much more bark than bite" for now. It also notes that Texas's pause on data-centre permits, which Bracewell expects to run to mid-December, is outside the 2.3 gigawatt figure.

## Where the limit sits

Put the two stories side by side and they point the same way, with a caution. In the American audit, the legal obstacle turns out to be thinner than feared. In Essex, the physical one is thicker than the schedule assumed. A veto can be routed around by moving a boundary or waiting out a term. A transmission upgrade cannot be argued with. The caution is that the two come from different places, with different data, and that SemiAnalysis forecasts American capacity while the British case rests on one reported contract. Nobody has measured how many UK projects are in Loughton's position.

Now imagine the same planner at a desk in the north of England a year on, a second invented figure. A developer rings to ask whether the date has moved. She has a new study open, and she tells the caller what she tells everyone: the building can be finished long before the line can.

## References

- Dina, C. (2026). *Microsoft reportedly quits Nscale's UK data centre weeks before its IPO*. The Next Web. https://thenextweb.com/news/microsoft-pulls-out-nscale-loughton-data-centre-ipo
- Downing, S. (2026). *300-plus local data center bans have only delayed just three US projects*. Tom's Hardware. https://www.tomshardware.com/tech-industry/data-centers/300-plus-local-data-center-bans-have-only-delayed-just-three-us-projects-bans-much-more-bark-than-bite-only-2-3-gigawatts-of-data-centers-are-held-up-versus-38-gigawatts-expected-online-in-2027
- Milmo, D. (2026). *Launch of UK's 'largest AI supercomputer' delayed by power supply problems*. The Guardian. https://www.theguardian.com/technology/2026/sep/24/construction-largest-supercomputer-delayed
- Ofgem (2026). *Ofgem acts to free up grid capacity by tackling speculative data centre projects*. https://www.ofgem.gov.uk/press-release/ofgem-acts-free-grid-capacity-tackling-speculative-data-centre-projects
- SemiAnalysis: Barkin, M., Knuhtsen, R., Eliahou Ontiveros, J., & Patel, D. (2026). *Everyone Says Datacenter Moratoriums Are Killing the US Buildout. We disagree*. https://newsletter.semianalysis.com/p/everyone-says-datacenter-moratoriums
- Topham, G., & Down, A. (2026). *Microsoft pulls out of AI datacentre project in Essex over power supply concerns*. The Guardian. https://www.theguardian.com/uk-news/2026/oct/18/microsoft-drops-huge-ai-datacentre-project-in-essex-over-power-supply-concerns