AI power contracts pay when racks arrive. Nscale carries the grid delay
Amazon is backing a 960 MW Indiana reactor that may never be built. Nscale has only $2.6bn live in a $103.4bn contract book, so Loughton's delay stays with the developer.
On Monday Amazon agreed to support development of a nuclear plant in Indiana that does not exist yet. The plant would have 960 MW of capacity, and MW means megawatts, a unit of power.
A day earlier the Telegraph reported that Microsoft had ended its involvement in a UK data centre at Loughton. The reason given was that the site's electricity will not arrive until the 2030s. On Monday Microsoft confirmed the exit, saying the decision "relates to a single site".
Together they show who pays when power arrives late. In AI infrastructure, the customer pays for electricity and racks only when they are delivered. The party holding the grid connection carries the wait.
That holder is either a utility or a neocloud, a specialist firm that rents out GPU capacity. GPUs are the chips that run AI. Amazon took an option on a utility's nuclear project. Nscale sold a schedule, and that schedule depends on a grid it does not control.
In Indiana, the utility AEP and the reactor developer X-energy signed a joint development agreement to evaluate a new project. The site is a former coal plant in Sullivan County. It would use 12 reactor units of 80 MW each, which adds up to 960 MW.
Amazon is supporting the project's development through a funding agreement. In the words of its own announcement, it would be the first customer to buy the power once the plant operates. This is the second project under a collaboration that aims to add more than 5 GW of nuclear capacity by 2039. A GW, or gigawatt, is 1,000 MW.
The commitment is conditional at every step. Amazon intends to buy the power only if the project reaches a final investment decision, the point where the owners commit to build. The contract would be long term, "covering the costs of the facility and its operations for the duration of the contract".
Neither company gives a project cost, Amazon's dollar commitment or an in service date. AEP's chief executive, Bill Fehrman, said the agreements provide "all necessary capital protections and financial safeguards". The utility has called these essential for any nuclear project.
Amazon is paying for an option. The utility is protected before it builds anything.
Loughton sits at the other end of the same spectrum. When Nscale announced the site in September 2025, it promised 50 MW of capacity, expandable to 90 MW. Microsoft had said it would fund a supercomputer there.
Nscale also promised 23,040 Nvidia GB300 GPUs delivered in the first quarter of 2027.
Nscale says it remains committed to the site and is exploring other power sources. It calls its relationship with Microsoft strong and long term. It blames a London wide grid issue that it says does not affect its other contracts.
Microsoft says it remains committed to the partnership. The two companies still work together in Norway, Portugal and the United States. A person familiar with the matter told AFP that Loughton was only a small part of Microsoft's agreements with Nscale.
The grid delay had already been reported before Microsoft left. UK Power Networks had told Nscale that the grid could not supply the site before the early to mid 2030s. That was reported on 29 September, three weeks earlier.
The filing assigns the delay to Nscale regardless of how the dispute ends. Nscale's registration statement, filed on 18 September with US regulators, describes the terms. Its take or pay contracts, where customers commit to pay for reserved capacity, "commence upon successful delivery of GPU compute clusters".
The filing counts 103.4 billion dollars in active and contracted value. Only 2.6 billion of it was active on 31 August. That is 2.5 percent, so almost all of the book is still waiting for delivery.
Microsoft's statements of work, the order documents under its contract, cover up to about 43.8 billion dollars through December 2033. The filing makes payment subject to delivery and availability of service. Either side may end a statement of work for cause, on 60 days' notice of a breach. Either side may also end it if the other party stops carrying on business.
Nothing in those terms pays for a site that has no power. A data centre without electricity is therefore a delivery failure, and the failure belongs to Nscale. The Telegraph reported separately that delays at Nscale's Norway flagship have reportedly led to heavy penalties, which is the same allocation in practice.
One anchor tenant, meaning the biggest customer, can change the economics of the whole book. Microsoft and Anthropic together account for up to 88.4 billion dollars of the total. That is 85.5 percent.
The filing also warns about sites needing a utility connection. At those sites, Nscale "may encounter delays in securing such connection or may be unable to secure the capacity required". Its site table lists a 50 MW owned UK site still in the contracted column. A separate 20 MW UK colocation site, where Nscale rents space in a building, appears alongside it.
Microsoft's exit could suggest weaker AI demand. The filing points to a site problem instead. OpenAI withdrew from the Stargate Norway and Stargate UK partnerships in April. Microsoft then expanded its agreement with Nscale to take the extra capacity at Stargate Norway.
The filing also lists a Sines site in Portugal where Microsoft is due to receive 66,000 Vera Rubin GPUs from late 2027. Vera Rubin is Nvidia's next chip generation. A buyer that leaves one site while adding capacity at others is reacting to that site.
The size difference clarifies the allocation. The Indiana project is 19.2 times the size of the 50 MW Loughton phase. Amazon is supporting its development now, and a contract covering the whole facility follows only if it is built.
Loughton's 50 MW is 50,000 kW, and dividing that by 23,040 GPUs gives 2.17 kW of facility capacity for each GPU. None of that capacity earns contracted revenue until the racks are delivered and powered. Amazon has paid for the development option; Nscale carries the Loughton wait without contracted revenue.
For a developer negotiating an anchor tenancy in a grid constrained market, the choice has a cost. A take or pay contract whose term starts on delivery is cheaper to win, and it is what Nscale signed.
A tenant funded development agreement, of the kind AEP obtained from Amazon, pays for the wait. But the tenant that funds development will want first call on the capacity and a right to exit. That shrinks the pool of tenants and lowers the headline contracted value, which lenders read first.
Nscale promised delivery of the Loughton GPUs in the first quarter of 2027, a window that closes on 31 March. The grid connection it has been told to expect arrives in the 2030s. So every GPU delivered at that site before then needs the alternative power Nscale says it is exploring.
Until then, Loughton's 50 MW sits in the contracted column with no revenue. A feasibility agreement in Indiana will still be development spending on that date.