Amazon Pumps Cash into Fulfillment Centers, Renewable Energy Infrastructure

Amazon keeps adding to its empire—both on the fulfillment side and on the renewable energy side.

The company keeps snapping up and building real estate throughout the U.S., a move that comes as other players—particularly Walmart—ramp up comeptition with the e-commerce juggernaut. 

According to Amazon CEO Andy Jassy’s April letter to shareholders, the company has been focusing heavily on faster delivery times, made possible in part by an increase in localized facilities. 

“In 2023, Amazon delivered at the fastest speeds ever to Prime members,” he wrote. “In the U.S., this result is the combination of two things. One is the benefit of regionalization, where we re-architected the network to store items closer to customers. The other is the expansion of same-day facilities, where in 2023, we increased the number of items delivered same day or overnight by nearly 70 percent YoY.” 

Jassy also said the company’s inbound fulfillment processes and how and where it places its inventory are in focus for 2024. Indeed, Amazon seems to be putting its money where its mouth is. 

In 2024, Amazon has already—or has plans to—add more than 20 million more square feet of fulfillment center space to its real estate portfolio, according to MWPVL. New facilities have or will be popping up in California, Florida, Georgia, Massachusetts, Oregon and other states, the supply chain consultancy’s tracking documents show. 

These more regionalized fulfillment centers, Jassy said, have helped to decrease the length of travel for orders, which decreases the company’s cost to serve. With the savings, Amazon can “invest in speed improvements and afford adding more selection at lower average selling prices,” Jassy said. 

But fulfillment centers aren’t the only infrastructure Amazon has been investing in lately. The company announced Tuesday that its machine learning systems, powered by AWS, have been operationalized at a solar energy site in Baldy Mesa, California. 

A machine learning algorithm will help a battery system determine how to store and subsequently distribute energy, particularly during times when it’s dark out. During the daytime, the grid runs on solar, so long as it’s not too cloudy for the sun’s rays to reach the solar panels effectively. Simultaneously, the battery energy storage system (BESS) charges, capturing energy to use for later. 

By using technology to capture and release the appropriate amounts of energy, Amazon is working to ensure carbon-free energy is available to power the grid even when the sun isn’t out, Kara Hurst, Amazon’s vice president of worldwide sustainability, said in a blog post. 

“AI is an important tool that’s already helping our society make the transition to carbon-free energy and address climate change at scale,” said Kara Hurst, Amazon’s vice president of Worldwide Sustainability. “Pairing solar projects enabled by Amazon with AI technologies powered by AWS helps to ensure the grid and the customers it serves receive a steady supply of carbon-free energy for more hours each day, while also helping Amazon make progress toward our commitment to be a more sustainable company.”

This particular facility, a utility-scale project, is owned and operated by AES Corporation. Amazon has also helped to enable 10 solar-plus-storage projects in the southwestern U.S., including the Bellefield project, one of AES’ other solar and battery sites in Kern County, California. That project is expected to be the largest planned solar-plus-storage facility in the U.S., according to the company. 

However, the company has also begun piloting the technology at one of its natively owned facilities: its air hub in San Bernardino, California, about an hour away from the Baldy Mesa site. At the site, the company owns a 5.8-megawatt solar array that is complemented by a 2.5 MW BESS. The energy ingested by the BESS is leveraged at night or at times of high pressure on the at-large grid in the area.

The company plans to use the data and learnings it gathers from the San Bernardino site, and others, for an AI model that could share predictive insights into Amazon’s green energy-integrated sites.

Kevin Hagen, interim CEO of the Clean Energy Buyers Assocation, said marrying emerging technologies with renewable energy could be a viable way for the e-commerce industry to decrease its carbon footprint.

“Battery storage projects enable increased use of renewable energy, helping ensure that the clean energy from solar and wind projects is available to the grid at all times,” said Kevin Hagen, the Clean Energy Buyers Association’s interim CEO. “Energy storage, smarter and more interactive load management tools, and AI are among the new technologies that hold significant potential in a lower-cost transition to carbon-free energy.”