Grid delays hit a flagship project
On 19 October, Microsoft confirmed it had pulled out of a deal to anchor Nscale’s data centre in Loughton, Essex, after grid officials said power would not reach the site until the 2030s. The facility was due to begin operating in early 2027 with 23,040 Nvidia GB300 chips and 50 megawatts of computing capacity.
The project was among the technology deals announced during US President Donald Trump’s visit in September 2025. Nscale said it remained committed to the site and was exploring alternative power sources. Microsoft UK chief executive Darren Hardman said the company’s wider UK investment plan “will not change”.
Grid connection queues have delayed some UK data centre projects by as long as 13 years.
Lenders look to limit exposure
Financing is a second concern. Barclays is looking to buy default protection from insurers on more than $10 billion of AI infrastructure debt to free up room for further lending.
The Bank of England’s Financial Policy Committee said in July that the UK has the largest data centre pipeline in Europe. The committee warned that frontier AI data centres can quickly become outdated if they cannot support the latest chips, which could reduce collateral values and the cash flows available to service debt. It also named insufficient grid connections and labour shortages as limits on the build-out.
Investor appetite for established operators remains strong. TPG is in talks to buy British data centre group Ark from Elliott Investment Management at a valuation of about $5 billion.
Government offers priority grid access
In the Budget announced on 28 October, Chancellor John Healey announced a British Data Centre Covenant. Strategically important data centre projects that meet additional government requirements, including commitments to local communities, job creation and environmental protection, could receive priority grid connections and support for on-site power generation.
The government estimates the UK needs 6 GW of AI data centre capacity by 2030. It says the AI growth zones programme has generated £28.2 billion of investment so far. It is unclear how far the covenant will shorten waits for projects already in the queue.