Fifteen fire engines were called to the Beddington Lane site at around 6:30pm on Tuesday. It took until after 4:00am today to control the blaze, which is not being treated as suspicious.
No people were hurt but a number of dead fish were found in the River Wandle. A Thames Water spokesman said the fire cut off power to the site, causing partially treated sewage to overflow.
He said: “Fortunately, no one was injured but this did affect the quality of the effluent discharging into the River Wandle before we got alternative power supplies running.
“The Environment Agency has been on site helping to limit the impact on the river but regretfully, a number of dead fish have been found.
“We are still investigating the cause of the fire and will be working with the Wandle Trust to monitor the effect on wildlife.”
The Wandle Trust is inviting people with information on the environmental impacts to post updates on its website.