Amazon turned off solar energy systems at all of its US facilities in 2021 after a rash of fires and explosions, including one at its Fresno warehouse in 2020.
Fresno Fire Department
On the afternoon of April 14, 2020, dozens of firefighters arrived at an Amazon warehouse in Fresno, California, as thick plumes of smoke poured from the roof of the 880,000-square-foot warehouse.
Some 220 solar panels and other equipment at the facility, known as FAT1, were damaged by the three-alarm fire, which was caused by “an undetermined electrical event within the solar system mounted on top of the roof,” Leland Wilding, Fresno’s fire investigator, wrote in an incident report.
A little over a year later, about 60 firefighters were called to an even larger Amazon facility in Perryville, Maryland, to put out a two-alarm blaze, local news outlets reported.
In the intervening months, at least four other Amazon fulfillment centers caught fire or experienced electrical explosions due to failures with their solar energy-generating systems, according to internal company documents viewed by CNBC.
The documents, which have never been made public, indicate that between April 2020 and June 2021, Amazon experienced “critical fire or arc flash events” in at least six of its 47 North American sites with solar installations, effecting 12.7% of such facilities. Arc flashes are a kind of electrical explosion.
“The rate of dangerous incidents is unacceptable, and above industry averages,” an Amazon employee wrote in one of the internal reports.
The solar snafus underscores the challenge Amazon and many other large corporations face in their quest to shrink their environmental footprint and reduce reliance on fossil fuels. Amazon has been among the most aggressive. In 2019, founder Jeff Bezos launched the Climate Pledge, promising the largest online retailer would zero out emissions by 2040, embrace renewable energy and move away from gas-guzzling delivery vans, including through a billion-dollar-plus investment in electric vehicle company Rivian .
Amazon’s learning curve with solar
Corporate America is under pressure from regulators and a growing subset of investors to set and report on environmental, social and governance (ESG) goals.
Many will be able to reap financial rewards for renewable energy efforts after Congress in August passed the Inflation Reduction Act, which includes climate provisions projected to reduce the country’s carbon emissions by roughly 40% by 2030.
Commercial solar in the US is expected to see 8% annual growth over the next five years, thanks in part to the legislation, according to Wood Mackenzie solar analyst Michelle Davis. Warehouses can take outsized advantage of solar, she said, because they have large roofs and the systems can power all the HVAC, refrigeration and other energy-heavy systems located inside.
But costly and dangerous issues can arise.
Solar energy systems on the roof of Amazon’s Fresno warehouse sparked a three-alarm fire in 2020.
Fresno Fire Department
By June of last year, all of Amazon’s US operations with solar had to be taken offline temporarily, internal documents show. The company had to ensure its systems were designed, installed and maintained properly before “re-energizing” any of them.
Amazon spokesperson Erika Howard told CNBC in a statement that the incidents involved systems run by partners, and that the company responded by voluntarily turning off its solar-powered roofs.
“Out of an abundance of caution, following a small number of isolated incidents with onsite solar systems owned and operated by third parties, Amazon proactively powered off our onsite solar installations in North America, and took immediate steps to re-inspect each installation by a leading solar technical expert firm,” the statement said.
Those details didn’t show up in Amazon’s 100-page sustainability report for 2021, which was published at the beginning of August. In that report, available to the public via Amazon’s sustainability website, the company said rooftop solar was powering 115 of its fulfillment centers across the globe by the end of 2021, up from more than 90 in the middle of the year. The majority of those are outside the US
“Many of our fulfillment facilities throughout the US, Europe, and India are powered by on-site solar, where a rooftop installation can power up to 80% of the facility’s energy use,” the report said.
By April of this year, Amazon had onsite solar at 176 facilities, according to its website. The solar program was launched in 2017.
“As inspections are completed, our onsite solar systems are being powered back on,” Howard said. “Amazon also built a team of dedicated solar experts overseeing the construction, operations, and maintenance of our systems in-house to ensure the safety of our systems.”
Excluded from the public sustainability report is any mention of the expenses Amazon incurs when there’s a failure. An Amazon employee estimated, in the documents circulated internally, that each incident cost the company an average of $2.7 million. Costs included third-party audits of rooftop solar systems, checks on how much electricity they were generating and repairs for any broken or faulty parts of the systems that inspectors identified.
The Amazon employee also said the company would lose $940,000 per month, or $20,000 for each of the 47 decommissioned North American sites, as long as the solar remained offline. There could be additional costs for Amazon depending on contracts with clean energy partners for renewable energy credits, the documents show.
To date, Amazon has contracted with third-party vendors to design, then install solar photovoltaic systems on rooftops and big backup batteries on site. Other major retailers, including Walmart and Target, have also installed solar rooftops and adopted programs to trim their energy bills and reach sustainability goals.
In addition to its warehouses, Amazon has some solar roof systems at its Whole Foods stores. Amazon and its auditor, Clean Energy Associates (CEA), put off inspection of the solar rooftop systems at Whole Foods locations until 2022, the documents said. As of late 2021, four years after acquiring Whole Foods, Amazon was still working to attain technical information about the renewable energy assets at the stores.
Solar panels being installed on the roof of a Walmart store in California.
To maintain tighter quality control of its solar energy systems, some Amazon employees recommended bringing more operations in-house. The fire in Perryville, Maryland, which was the sixth failure in a little over a year, spurred the company to take systematic action.
On June 17, 2021, roughly a week after the fire at the warehouse known as MDT2, Amazon’s sustainability division directed the owners and developers of solar rooftop systems on its US warehouses to decommission them. The solar rooftops would no longer be generating electricity from the sun or producing renewable energy credits.
Amazon then hired Denver-based CEA to conduct a third-party audit of its rooftop solar systems in the US, Asia-Pacific and Europe, Middle East and Africa region.
Late last year, while CEA was still conducting its inspections, it informed Amazon of one critical and 259 major findings across Amazon’s rooftop solar portfolio. Problems included mismatched module-to-module connectors, improper installation of connectors, poor wire management and evidence of water intrusion in the inverters, internal documents said.
Issues with inverters, which convert solar energy into usable electricity, were identified as the likely cause of a fire in at least one Amazon warehouse. Wilding, the Fresno fire inspector, concluded the blaze at FAT1 “originated on or near two inverters,” according to an investigation report obtained by CNBC through a request for public records.
Malfunctions and improper installations
Amazon blamed third-party partners and vendors for the most significant problems uncovered by CEA and other teams working on facilities and sustainability initiatives.
“Over the past five years, solar malfunctions have been caused by improper installation techniques, improper commissioning of a new system, inadequate system maintenance and equipment malfunction,” the documents said.
Amazon teams working on facilities and sustainability initiatives devised a two-part plan to help prevent future breakdowns in the rooftop solar program.
In late 2021, the divisions requested $3.6 million in funding to reinspect sites where major findings were identified in order to ensure the systems were safe to be brought back online, according to internal correspondence.
Internal teams also began to urge Amazon leadership to rely more on salaried employees and less on outside vendors. Over time, the company hired more solar experts focused on procurement, design, construction and maintenance globally.
In some cases, management was notably slow in responding. For example, the groups inside the company agitating for change went to leadership for approval on the hiring, re-inspection and re-energizing plans. But the efforts were held up for months by top Amazon executives, including Kara Hurst, vice president of worldwide sustainability, and Alicia Boler-Davis, senior vice president of global customer fulfillment, who left the company in June 2022, according to internal correspondence viewed by CNBC.
Job openings suggest Amazon is still seeking to hire people internally for solar operations.
The company was recently looking for someone to manage sustainability projects across its North American facilities, which include rooftop solar. There’s a current listing for a technical program partner on the solar team says that a key aspect of the position is collaborating with “internal partners” in worldwide design, solar construction and sustainability, among other divisions.
As it tries to staff up, Amazon has acknowledged that going green comes with hurdles, particularly for a company “of the size and broad scope of Amazon.”
“But at Amazon, we don’t shy away from big challenges,” Hurst wrote, in the letter kicking off the 2021 sustainability report. “We don’t have all the answers today, but we believe in the need to act now.”
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