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Microsoft has pulled out of a data center agreement with British cloud services provider Nscale, The Telegraph newspaper reported on Sunday.
The U.S. technology company, one of Nscale’s two largest customers, recently terminated its agreement for a planned data center in Loughton, Essex. Loughton is a town on the northeastern edge of London. The newspaper did not state why Microsoft withdrew from the project. Microsoft did not comment to The Telegraph.
The Telegraph reported that Nscale had faced repeated delays on the project. National electricity grid officials told the company they did not expect to supply power to the data center until the 2030s, according to the report.
A spokesperson for Nscale said in a statement, as reported by Reuters: “Our relationship with Microsoft continues to be strong and long-term. This unfortunate issue related to the electricity grid across London does not affect our other contracts.”
The spokesperson added that Nscale remains committed to both the Loughton project and the United Kingdom. The company is exploring alternative energy sources for the facility, along with other expansion sites in the U.K., the spokesperson said.
Nscale and Microsoft announced the Loughton project in September 2025 as part of a package of technology investments unveiled during U.S. President Donald Trump’s state visit to Britain. Microsoft was expected to be the anchor tenant, and earlier reports said the company planned to build a supercomputer at the site with more than 23,000 graphics processing units (GPUs).
The data center is valued at £2 billion ($2.7 billion). Nscale had targeted an opening in 2027, after an earlier plan to open by the end of 2026. An earlier Telegraph report said Nscale held talks with Bloom Energy, a California-based supplier of fuel cells, about alternative power arrangements for the site.
As part of a £2.5 billion commitment to the United Kingdom, Nscale has said it will build multiple modular data centers in the country, with locations not specified.
The project also faced local planning questions. Loughton Town Council officers called in March for a fresh planning application because of changes Nscale proposed, while the final decision rests with Epping Forest District Council. The U.K. government reportedly urged the district council to back the plan, according to an earlier Telegraph report.
In April, OpenAI reportedly withdrew from a separate agreement to lease space at several unbuilt Nscale data centers in the country, while Google reportedly agreed to take capacity at an Nscale site in West London.
Nscale filed for an initial public offering (IPO) in the United States last month. According to its prospectus, Microsoft and Anthropic are expected to be its main customers. Reports say the listing could raise as much as $3 billion.
Nscale provides infrastructure services for training and running artificial intelligence models, including computing capacity, power, data centers and software. The Nvidia-backed company competes with CoreWeave, Nebius, Crusoe and Lambda, and has been valued at around $15 billion as a private company, according to Capacity. It has grown quickly since its founding, raising its total contract value from $100 million to more than $103 billion in less than three years.
Bloomberg reported that Nscale’s flagship site in Norway is about six months behind schedule, with 6.4 megawatts of a planned 30 megawatts operating.
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