Chairman's Message

Dear Stakeholders,

2019 has been a challenging year for the world. The uncertainty around how the U.S. and China, the two largest economies of the world, would resolve trade issues was the main cause of the slowdown in the global economy. Although the constructive approach and the first-phase agreement are very positive steps, there are still important issues that need to be addressed. In 2019, Brexit continued to be an important agenda item. After the elections in the United Kingdom, the new UK government committed to completing the Brexit process by the end of 2020. The issue is closely watched in the world as the new deal to be signed by the U.K. and the EU is expected to have long-term repercussions on the region’s economy and business environment.

While the OECD reduced its global economic growth forecast for 2020 to 2.9 percent, the IMF lowered its global growth forecast for 2020 from 3.4 percent to 3.3 percent and for 2021 from 3.6 percent to 3.4 percent.

Year of stabilization in the Turkish economy

2019 was a year of stabilization for Turkey. In the first half of the year, the Central Bank of the Republic of Turkey (CBRT) followed a tight monetary policy. Starting in the second half of the year, the CBRT lowered its policy rate by 1,200 basis points, in light of the improvement in inflation and the expansionary policies adopted by the central banks of developed countries. All these developments played a supporting role in stabilizing the Turkish economy.

The Turkish economy, which contracted by 2.3 percent and 1.6 percent, respectively in the first and the second quarter, grew by 0.9 percent in the third quarter and 6 percent in the last quarter, closing the year 2019 with a 0.9 percent overall growth.

Turkey’s economy has undergone difficult times in recent years. But where we are today shows that we have started to get out of this ordeal very quickly. In 2019, we achieved significant success in reducing the current account deficit, which was the biggest vulnerability of the economy in the past. In light of all these developments, 2020 is viewed as a very important year for Turkey. While we will be trying to achieve our growth targets, the efforts to reduce inflation and interest rates to a single digit will continue. In addition, the structural transformation steps stated in the New Economy Program, which will increase the competitiveness and the depth of the goods and services markets will be continued.

The energy market is one of the biggest value chains in Turkey

A key focus of the program is certainly the energy sector, which has both strategic and economic importance for our country. In 2019, Turkey’s energy sector continued to aim and work for a predictable energy market and uninterrupted supply. The first phase of the growth process has been largely completed with over USD 100 billion invested in the sector, including privatization tenders, in the last 15 years.

Turkey is the 10th largest energy market in the Organization for Economic Development and Cooperation and is also Europe’s sixth largest oil market, fourth largest electricity market and third largest gas market.

Domestic and renewable energy remained at the forefront of Turkey’s energy agenda in 2019. According to the Global Renewable Energy Investment Trends Report 2019, prepared in collaboration with the United Nations Environment Program and BloombergNEF, investments in renewable energy in the world (excluding large hydroelectric projects) reached USD 272.9 billion at the end of 2018. Turkey is one of the leading countries in renewable energy with its USD 2 billion of investments, according to the report.

We focus on renewable energy

In 2019, Zorlu Enerji continued to focus on renewable energy. In particular, we have become the sector’s benchmark in the field of geothermal energy. Zorlu Enerji singlehandedly accounted for 20 percent of Turkey’s total installed geothermal energy capacity as of the end of 2019. During the year, we continued to take significant steps to lend our expertise in this area internationally. Zorlu Enerji received the support of the EU for three of its projects developed in the field of geothermal energy under the Horizon 2020 Program, the EU’s largest Research and Innovation Framework Program, to be implemented between 2014 and 2020. At Zorlu Enerji, we are very proud to represent our country internationally.

One of the important steps we took in 2019 was to reach an agreement to sell our Sarıtepe and Demirciler wind power plants to Akfen Yenilenebilir Enerji AŞ to efficiently allocate our capital and create additional equity for our new investments. In line with our growth strategy, we aim to further expand our portfolio by undertaking new investments with the capital to be raised through this divestment.

In our overseas investments, we focus on assessing the potential in the Asian and Middle East energy markets, which are liberalizing and enjoying a rapidly rising demand. We continue to conduct research and invest in solar energy, which is one of the areas with high potential.

Moving forward to become the energy company of the future

We are in an era of digitalization that is fast becoming an integral part of our lives. Moving fast with its next-generation technologies to become the “energy company of the future,” Zorlu Enerji strives to implement a range of smart systems, from electric car rental to electric vehicle charging stations, from smart homes to smart energy management systems.

In 2019, ZES continued to build new charging stations for electric vehicles. As of the end of 2019, Zorlu Enerji’s electric vehicle charging points and sockets in Turkey reached 149 and 272, respectively.

Standing firm on sustainability

With climate change, urbanization, migrations, aging population, declining natural resources, socioeconomic changes and digitalization rapidly transforming our way of life, we are once again reminded about the importance of sustainable development. While it is true that all this change will continue to create economic value, the world will still keep its eyes on the common value approach and the solution to social and environmental issues.

Our controlling shareholder Zorlu Holding’s plan for its future dubbed “Smart Life 2030” involves innovative solutions to make life more productive, efficient, controllable, holistic and sustainable. Zorlu Enerji is one of the most important stakeholders in Zorlu Holding’s sustainability vision, both with the renewable energy investments and smart solutions it develops.

As of the end of 2019, Zorlu Enerji’s renewable energy investments accounted for 87 percent of its total installed capacity in Turkey. We plan to continue our investments in geothermal and solar energy, smart systems and electric vehicle charging stations in the coming period.

We will continue to add value to our country!

Zorlu Enerji moves onward with the goal of becoming the energy company of the future. While it continues to invest in renewable energy in Turkey, it also successfully represents our country with its expertise and know-how through its investments abroad.

As in the past, we will continue to develop value-added projects for the economy and the energy sector, adding value to our country.

On this occasion, I would like to thank our employees, our shareholders, business partners, and all our stakeholders for their dedication and the support they have provided in all our achievements.

 

Best regards,

Zeki ZORLU

Chairman