Chairman's Message

Dear Stakeholders,

At Zorlu Enerji, we celebrated our 25ᵗʰ anniversary in 2018. From day one, we have focused on success. During this quarter of a century, we have introduced our story – which started with a single power plant - to the world. We remain committed to our strong growth, adding our experience to the excitement of our first day.

2018 was not an easy year for both the world and the Turkish economy. Trade wars between the U.S. and China, Brexit-related developments, the U.S. Federal Reserve’s rate hike decisions, increasing borrowing costs, and ongoing political and geopolitical uncertainties have affected the growth rates of countries across the world. 

Following suit with the OECD, which reduced its forecast for global economic growth for 2019 to 3.5% due to increased risk of trade wars, the IMF cut its global growth forecast for 2019, which was 3.7% in the World Economic Outlook Report published in October 2018, to 3.5% in January 2019. 

Turkish economy continued to grow

Turkey, on the other hand, stood out with its growth performance despite the global economic developments, tension in relations with the United States, geopolitical risks, and the jump and increased volatility in exchange rates. Although the Turkish economy showed strong growth in the first two quarters with growth rates of 7.2% and 5.3%, respectively, the economic growth decelerated to 1.6% in the third quarter due to adverse impacts of the volatility in financial markets on economic activity and domestic demand. Despite slower domestic growth, 2018 turned out to be a year of record exports, which reached US$168 billion.

Reducing its growth forecasts for Turkey and many other developing countries, the IMF predicts that the Turkish economy will grow by 3.5% and 0.4% in 2018 and 2019, respectively. According to the New Economic Program (NEP) announced by the Republic of Turkey Ministry of Treasury and Finance, the projected growth rates for 2018 and 2019 are 3.8% and 2.3%, respectively. 

The NEP focuses on the negative effects of global impacts in 2019, regional issues, inflation, and current account deficit. The main objectives of the program were defined as balancing, discipline, and change. While domestic demand and investments have been slowing down since August, the increase in net exports’ contribution to the economy indicates that the economic rebalancing has kicked in. Inflation is expected to decline starting from the second half of 2019 with the contribution of the anti-inflation program and declining exchange rate and interest rates. Abroad, the effects of trade wars are expected to continue in 2019. The slowdown in China continues to present a significant risk for all the world economies. 

Renewable energy to remain at the forefront

The KPMG Energy Sector Outlook 2018 Report projects that global energy consumption will increase by 28% until 2040. Renewable energy sources stand out in response to the rapidly increasing consumption. Renewable energy is expected to be the world’s fastest growing energy source in the coming period driven by green energy, new technologies and energy policies. 

Domestic and renewable energy policies and increasing supply security were at the forefront of Turkey’s energy agenda in 2018. In line with the strategy of increasing the share of domestic and renewable energy sources in Turkey’s generation mix, domestic and renewable energy sources accounted for 93% of the new capacity brought online in 2018. 

As Zorlu Enerji, we continued to remain committed to our renewable energy investments in 2018. The second unit of Kızıldere III Geothermal Power Plant, which has a total installed capacity of 165 MW, was commissioned in March 2018 with 65.5 MW of installed capacity. The rehabilitation works to increase the installed capacity of İkizdere Regulator and Hydroelectric Power Plant from 18.6 MW to 24.94 MW, were also completed the in the first quarter of the year.

In 2018, we continued our work on solar energy. In this context, we signed new agreements to undertake solar power projects in Palestine and Kazakhstan during the year. We also closely follow business opportunities across the Middle East and Gulf countries, which offer high potential in solar energy. 

We cooperated with domestic solar panel manufacturers in Turkey for the production of membranebased solar panels for our industrial rooftop solar power applications. We started distribution of these panels and completed the first installations in Turkey. We also made the first export of these panels to Jamaica. 

Focus on generating sustainable solutions with smart systems

At Zorlu Group, we want to realize our dream of building a better future by designing a smarter life through innovative technological solutions. As a Group which operates in different sectors, from energy to textiles, household appliances to electronics, we believe that we have the necessary brains and tools to build a better future. As an innovative institution that rapidly adapts to technological developments and shares its knowledge with all its stakeholders, we remain focused on developing “sustainable solutions” that ensure the future prosperity of the individual, society and the planet.

At Zorlu Enerji, we continued to develop our work on Smart Systems in 2018. We first and foremost focused on spreading the use of electric vehicles in Turkey. To this end, we introduced our electric car-sharing platform “electrip” in 2018, a first in Turkey. 

In tandem with electrip, we launched our digital brand ZES (Zorlu Energy Solutions) to address an important hurdle - the lack of a charging infrastructure - for electric vehicles in Turkey. Under the ZES umbrella, we are building Turkey’s fastest charging station network for electric vehicles. Starting primarily with the big cities, we continue to work on installing charging stations for electric vehicles throughout Turkey. 

Guided by sustainability

We work with the understanding that sustainability is not a choice but a responsibility towards current and future generations. Therefore, sustainability is a guide for us. We shape our sustainability policy in line with the objectives of combating climate change, management of greenhouse gas emissions, energy efficiency, conservation of natural resources and responsible stakeholder dialogue, and we continue our efforts at a steady pace. 

In line with this vision, in 2018 we became the first energy company in Turkey to calculate and certify our Water Footprint and receive the ISO 14046 Water Footprint Certificate. We signed Turkey’s first Green Loan agreement with Garanti Bank. For the third year in a row, we were included in the BIST Sustainability Index, which consists of the shares of listed companies on Borsa Istanbul, which have a high corporate sustainability performance. 

We continue to work with great commitment!

Zorlu Enerji is taking firm steps towards the future. As a responsible and pioneering organization, which we have been for 25 years, we will develop value-added projects for the economy and the energy sector, add value to our country, and work with utmost dedication for the future of our country.

On this occasion, I would like to thank our employees, our shareholders, business partners, and all our stakeholders for their dedication and support.


Sincerely yours,