Who pays for artificial intelligence

Posted on: 6 November 2026

In September 2025, during Donald Trump's state visit, Nscale announced that it would build an AI data centre at Loughton in Essex with Microsoft as its anchor tenant. Nscale is a London company backed by Nvidia, the American chipmaker, which builds data centres and rents their computing capacity to large technology groups. Loughton was meant to start at 50 megawatts and grow to 90, and the Microsoft deal was worth around $3bn. On 18 October this year the Telegraph reported that Microsoft had walked away, because Nscale had been told that grid power would not arrive before the 2030s. Six months earlier OpenAI had paused Stargate UK, the project it had launched with Nvidia and Nscale during that same visit, citing the cost of electricity and regulatory uncertainty. This week Nscale lost a second piece of Microsoft business, this time in Texas, and the reason had less to do with cables than with voters.

On Tuesday 3 November Americans elected a new Congress halfway through Trump's second term, and the Democrats took both the House and the Senate in one of the most lopsided midterm results in modern history. The vote that moved markets, though, came from Texas, where Gina Hinojosa, a Democratic member of the state legislature, beat the sitting Republican governor Greg Abbott after campaigning for an immediate moratorium on new data centres, the vast server warehouses that power artificial intelligence. This is not a local detail, because analysts reckon that Texas will supply between a quarter and 30 per cent of the computing capacity America is preparing to build.

On Wednesday the market drew a finer distinction than the headlines suggested. The power producers most exposed to Texan data centres fell, with Vistra down 15.4 per cent, and so did equipment suppliers such as GE Vernova, which makes turbines and grid equipment and lost 11.5 per cent. Microsoft and Amazon, which run the two largest cloud businesses in the world, both rose by about 6 per cent, because investors reasoned that if building becomes harder the data centres already running become worth more. Whoever built yesterday now collects a scarcity rent, while whoever planned to build tomorrow pays twice, first in delay and then in the cost of money.

The case that makes the mechanism visible arrived on Thursday, when the Financial Times reported that Microsoft had declined an option to more than double the contract under which it rents computing power from Nscale at a site in Ward County, in west Texas. Nscale is preparing a US listing at a valuation that could reach $35bn. Reuters said it could not immediately verify the report, so it should be treated with caution, but the figures Nscale has published ahead of the listing speak for themselves. In the first half of 2026 it lost about $1bn on revenue of $141m, and of the roughly $103bn of contracts it reports only $2.6bn are already active.

The rest depends largely on customers choosing to exercise their options. An option is a right for whoever holds it and an obligation for whoever grants it, so Nscale must have land and power ready while Microsoft can simply wait. The more political uncertainty grows, the more the right to wait is worth, and the risk slides towards whoever has already committed capital. It would be wrong, however, to read the decision as a consequence of the vote. Loughton had already shown that Microsoft leaves when the conditions change, and in October the Nasdaq-100, the index of the hundred largest non-financial companies listed on Nasdaq, had fallen by almost 6 per cent because investors doubted that spending on AI would pay off quickly enough. The vote accelerated something that was already under way.

So much for the news. The interpretation heard most often this week is that the Democrats distrust artificial intelligence and want to regulate it before letting it grow, as they supposedly wanted to do with the internet. I had the same impression, then went back to check what actually happened with the internet, and the record says almost the opposite.

In 1996 Bill Clinton signed the Telecommunications Act, the great overhaul of American telecoms law, which contained Section 230, the provision that shields online platforms from liability for what their users post and without which much of the web we know would never have been built. The following year the White House published the Framework for Global Electronic Commerce, drawn up under Ira Magaziner, Clinton's senior policy adviser, which laid down that the private sector must lead and that governments should avoid undue restrictions. The vice-president at the time was Al Gore, the politician who had done more than anyone to promote the idea of the information superhighway. The only serious attempt to regulate in advance, the indecency provisions of the Communications Decency Act, was struck down by the Supreme Court in June 1997. The rules that survived came later, such as the 1998 law protecting the data of children under thirteen, and they targeted specific harms caused by a technology that was already in people's homes.

The party that is now applying the brakes is therefore the same one that thirty years ago opened the doors and asked for almost nothing in return. Nor does today's distrust belong to one side. Steve Bannon, once Trump's chief strategist, has attacked data centres on his programme War Room, while Bernie Sanders, the independent senator from Vermont, proposed a federal moratorium on new facilities in March together with the congresswoman Alexandria Ocasio-Cortez. A September poll for NBC found that 69 per cent of Americans would oppose a new data centre in their own community. An ideology does not gather support that wide on both sides.

What has changed is the order in which costs and benefits reach people's homes. The internet arrived as an immediate and measurable benefit, because email cost less than a stamp and comparing prices or booking a trip saved real money. The costs, from newspapers in crisis to personal data handed over without anyone noticing, came years later and were spread so thinly that nobody felt them all at once. With artificial intelligence the order has been reversed, and for many American families the first contact with the technology was the electricity bill or the windowless shed that appeared on the edge of town. The benefit arrives as a convenient and often free service, used every day by hundreds of millions of people, which weighs nothing on the household budget precisely because it costs nothing. The internet saved its users money, whereas artificial intelligence, for now, saves time for those who work and jobs for those who hire.

In fairness, the link between data centres and power bills is less straightforward than the campaign advertisements claimed. Economists consulted by FactCheck.org, the fact-checking project of the University of Pennsylvania, say that data centres are contributing to price rises on the grid that runs from Illinois to New Jersey, while at national level the evidence remains mixed. The shed is a perfect lightning rod because it can be seen and pointed at, while the rest of the increase has no address. Trump had grasped the problem too, and on 21 October he wrote that by his own decision data centres were required to generate their own electricity, but the pledge is voluntary and nobody monitors compliance. Tuesday's vote was not against a technology, then, but against a distribution of costs, against the idea that the people who collect and the people who pay are different people.

That helps to explain what is likely to happen next. A federal law that halts construction is improbable, because Trump holds a veto and many Democrats do not want to be the ones who slowed growth and handed ground to China. The real contest is in the states and the towns, where permits are granted. On Tuesday voters in 38 local jurisdictions decided on measures to delay, ban or attach conditions to data centres, and many of them passed, while Goldman Sachs expects the Democratic governors of Texas, Georgia and Michigan to impose conditional moratoriums until stricter laws are in place. Abbott himself had frozen new grid connections in August, after requests from data centres reached five times the state's record peak demand.

The most probable outcome is not a halt but a higher price. Capacity will move to friendlier states while projects cost more, since they will have to pay for their own power and compensate the communities that host them, and timetables will stretch. Every rule that raises the cost of building protects whoever has already built, so the moratorium that voters demanded against the technology giants risks becoming the moat that shields them from competitors. That is the usual fate of regulation born of anger, which hits those trying to get in far harder than those already inside.

Europe has a different problem, and in some ways a more serious one. The AI Act, the EU's regulation on artificial intelligence, came into force in August 2024 after being written on a continent that had no industry of that scale to regulate. In July this year the EU postponed the obligations for high-risk systems from August 2026 to December 2027, partly because the technical standards meant to explain how to comply were not ready. A regulator that delays its own rules because it has not finished writing how to apply them says a good deal about the relationship between the rule and the thing it rules. If you regulate a technology you do not produce, regulation becomes the only industrial policy you have, and you do not support development because there is nothing of your own to support.

Britain has taken neither road. There is still no AI law, since the bill that the Labour government promised for the most powerful models has not been introduced, and artificial intelligence is left to sector regulators such as the FCA and Ofcom, along the lines of the 2023 white paper. On cost, Britain has gone the opposite way to the American voters. From April 2027 data centres in AI Growth Zones, the areas the government has designated for them, are due to be exempted from part of the system costs on their electricity bills, worth up to £24 per megawatt-hour in Scotland for a 500-megawatt site, and the government says no extra cost will fall on other bill payers. Britain has answered the American question before anyone here asked it, by trimming the data centres' share of the bill so that they come at all. Loughton suggests that price was never the binding constraint, though, because the scarce thing is the connection to the grid.

Set side by side, the two shores of the Atlantic are arguing about different things. In America the argument is about who pays for artificial intelligence, in Europe about how to regulate an artificial intelligence that others pay for and own. Britain has not reached either argument yet, because it is still waiting for the cable.

Two mistakes follow from this. Investors should not read the vote as a rejection of the technology, or they will end up selling the wrong things, since the ones suffering are the builders and the power suppliers rather than those who already own capacity. Governments in Europe and in Britain should not read the American revolt as a vindication of their own approach, because Americans are complaining about the price of something that belongs to them, while we are still deciding how to govern something we do not have.

Nscale, meanwhile, must find another customer for its Texas site, in a state that from January will have a governor elected to slow down exactly that kind of building. In Essex it is still waiting for the electricity.