Amazon is focusing on fulfillment centers and renewable energy infrastructure

Amazon is constantly expanding its empire – both in terms of order fulfillment and renewable energy.

The company continues to acquire and develop properties across the United States, which comes as other players – notably Walmart – increase competition with the e-commerce behemoth.

According to Amazon CEO Andy Jassy’s April letter to shareholders, the company has focused heavily on faster delivery times, made possible in part by increasing the number of localized facilities.

“In 2023, Amazon delivered products to Prime members at the fastest speed ever,” he wrote. “In the US, this result is a combination of two things. One is the benefit of regionalization, where we have rebuilt the network architecture to store products closer to customers. The second is the development of one-day branches, where in 2023 we increased the number of parcels delivered on the same day or at night by almost 70%. y/y.

Jassy also said that the most important things for 2024 will be its inbound order fulfillment processes and how and where the company places inventory. Indeed, Amazon seems to be putting its money where its mouth is.

According to MWPVL, in 2024, Amazon has already – or plans to – add over 20 million square meters more space in logistics centers to its real estate portfolio. New facilities have been or will be coming in California, Florida, Georgia, Massachusetts, Oregon and other states, according to tracking documents from a supply chain consulting firm.

Jassy said these more regional fulfillment centers have helped reduce order travel times, which reduces handling costs for the company. With the savings, Amazon can “invest in improving speed and afford more selection at lower average selling prices,” Jassy said.

But logistics centers are not the only infrastructure that Amazon has been investing in recently. The company announced Tuesday that its AWS-powered machine learning systems went live at a solar energy facility in Baldy Mesa, California.

A machine learning algorithm will help the battery system determine how to store and then distribute energy, especially when it is dark outside. During the day, the network is powered by solar energy, unless it is too cloudy for the sun’s rays to effectively reach the solar panels. At the same time, the battery energy storage system (BESS) charges, capturing energy for later use.

By using technology to capture and release appropriate amounts of energy, Amazon is trying to ensure that carbon-free energy is available to power the grid even when the sun is not shining, Kara Hurst, Amazon’s vice president of global sustainability, said in a blog post.

“Artificial intelligence is an important tool that is already helping our society transition to carbon-free energy and address climate change at scale,” said Kara Hurst, Amazon’s vice president of global sustainability. “Combining Amazon’s solar projects with AWS-powered AI technologies helps ensure that the grid and the customers it serves receive a consistent supply of carbon-free energy for more hours every day, while also helping Amazon make progress on our commitment to be more a sustainable company.”

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

However, the company has also begun piloting the technology at one of its home facilities: an airport hub in San Bernardino, California, about an hour from Baldy Mesa. The company has a 5.8 MW photovoltaic array on site, supplemented by a 2.5 MW BESS. The energy collected by BESS is used at night or during periods of high pressure on a large network in a given area.

The company plans to use data and insights collected from its San Bernardino location and other facilities to create an artificial intelligence model that could provide predictive insights about green energy-integrated Amazon sites.

Kevin Hagen, interim CEO of the Clean Energy Buyers Association, said combining new technologies with renewable energy could be a viable way for the e-commerce industry to reduce its carbon footprint.

“Battery storage projects enable increased use of renewable energy by helping ensure continued access to the grid for clean energy from solar and wind projects,” said Kevin Hagen, interim CEO of the Clean Energy Buyers Association. “Energy storage, smarter and more interactive load management tools, and artificial intelligence are among the emerging technologies that hold significant potential for a cheaper transition to zero-emission energy.”