Home / Technology / Microsoft Ditches UK AI Giant Over Power Woes
Microsoft Ditches UK AI Giant Over Power Woes
18 Oct
Summary
- Microsoft cancelled a major AI capacity lease deal with Nscale.
- The Loughton data centre faces power supply delays until after 2030.
- The power grid connection backlog impacts many UK data centres.
Microsoft has withdrawn from a significant deal to lease computing capacity from the UK start-up Nscale. The cancellation is due to the anticipated delay in power supply for Nscale's Loughton data centre, which is now not expected to be connected to the grid until after 2030, far beyond the initial plan for this year.
This development poses a challenge for Nvidia-backed Nscale, which includes prominent figures like Sir Nick Clegg and Sheryl Sandberg on its board and is aiming for a New York IPO valued at $35bn this year. The Loughton deal was a key part of Microsoft's previously announced £22bn investment in the UK, intended to establish one of the country's largest AI supercomputers.
Nscale acknowledged the power supply issue, stating they are exploring alternative power sources and other expansion sites in the UK. They emphasized that their relationship with Microsoft remains strong and that this grid issue does not affect other contracts. The company relies heavily on Microsoft and Anthropic as major customers, with existing capacity leases in Texas and Norway.
The UK's energy regulator, Ofgem, has warned of a significant backlog in electricity connection applications. Approximately 315 data centres are awaiting connection, collectively demanding about 73GW of power, which vastly exceeds the UK's peak national demand of 45GW, creating a substantial bottleneck for the sector.
