EXCELLENCE IN ITALIAN INDUSTRY TECHINITALY

N.4 / 2016

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CONTENTS

Internationalization, a Serious Way to Get Out of the Crisis Fabio Sdogati

"Made in Italy" Businesses Abroad. In 2015 the Investments Go UpAlessandro Seregni

Internationalization of Italian Electronics and Electrical EngineeringEditorial Staff

Italian Stories Editorial Staff

Italy in the Top Ten List of Regenerative Medicine StudiesEditorial Staff

Mapping Mechatronic Competencies in ItalyMarta Mazzanti

Liberalization of the Electric Power Retail Market Between Euro-pean Prompts and English BacktrackingCarlo Stagnaro

Mediterranean: Facing Unprecedented Energy Challenges Tiziana Tronci

Petronas Choses Turin for Its Global Research Center Editorial Staff

TECH IN ITALYN.4/2016

Editor-in-ChiefEmanuele Martinelli

Advisory BoardMarcello Capra, Raffaele Di Stefano, Diego Gavagnin

Editorial StaffMarta MazzantiAlessandro Seregni

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INTERNATIONALIZATION, A SERIOUS WAY TO GET OUT OF THE CRISIS Fabio SdogatiMIP – Business School, Politecnico of MilanHead of International Economics

COLUMN/

The crisis, or rather, the crises that Italy and Europe have gone through since 2007, at present, entail a series of stereotypes that need to be overcome. They include, above all the belief that critical periods have no origin, evolution and development, but they are some sort of divine punishment, a misfortune falling from heaven, without any link with the past events that is the history. The second cliché is that only the private and entrepreneurial initiative will be able to improve the economic situation, without any political or institutional aid or interven-tion. However, the statistical data indicate that the European crisis was induced, in that the economy of the Old Continent was increasingly driven down through a long period of austerity.

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In 2009, the growth in the United States and Europe came to a halt, now defi-ned as “great recession”, when unemployment rates in both areas were rea-ching 10%. Nonetheless, the recession overseas was limited in time, whe-reas in Europe and especially in Italy, the negative economic situation not on-ly lasted for a long time, but also generated different phases of recession.The reason for difficulties in forecasting the subsequent events was that simi-lar conditions had never occurred before. The present situation makes the discount rate to raise above zero at which it stands now (whereas in the past the discount rate rose from 6 to 6.5). And it is also the reason why neither the governments nor the central bank does undertake any action.Similar conditions of unpredictability also refer to the internal demand which a U.S. economist Larry Summers defined as “secular stagnation.” Therefore it is incorrect to affirm, as some people do, that the recovery is in progress. Currently, one should not center around the question of “is there ever going to be a recovery?”, but rather “who will activate the recovery mechanisms?.” The reply, considering all that has been said so far is: “it will be the busines-ses.” They will use the instruments they have known for ages that is training, investments and internationalization, even though there is still a long way to go in these respects. Thinking in terms of the Italian enterprises, we know that their average investment in training of each employee is €400, whereas of those based in Belgium: €1.150.Moreover, the data confirm the fact that the recovery is slow and hard, consi-dering that the growth rate has barely gone up again since 2007. Apart from the differences, this situation regards all the nations and the relevant econo-mies. Also the growth rate of the German “locomotive”, despite being a dri-ving force of the European Union’s economy, shrank from 7% in 2007 to 1% in the recent years (chart 1).Obviously, the changes do not regard only Europe, but they affect all the eco-nomies at the global level, including those of China and Brazil. Also in that case, with the South American country in the first place, the dream of growth has come to an end (chart 2). On the contrary, the GDP of the United States, although to a lesser extent, continues to grow.Therefore, in order for the recovery to take its course, it is impossible to rely only on the government’s decisions or a divine intervention. The only possib-le options are hard work, opening to new markets, the creation of new allian-ces and internationalization.

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3"

The Impact of The Great Recession

Real per-capita GDP, cumulative change over the period 2007 – 2014:

-25% -13%

-7% -6% -6%

-3% -3% -2% -1%

0% 1% 1% 2%

4% 7%

9% 15%

43% 74%

-40% -20% 0% 20% 40% 60% 80%

Greece Italy

Spain Denmark Portugal Norway

Netherlands United Kingdom

France Sweden

Japan Switzerland

United States Mexico

Germany Russia Brazil India China

Source: IMF’s World Economic Outlook, October 2015

Economic Forecasts

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Real GDP Growth rate forecast, emerging market economies, (annual % change), 2015 – 2016:

7,5

6,3

6,4

4,9

4,5

4,3

3,0

3,9

2,8

0,8

0,5

-1,0

7,3

6,8

6,5

4,6

4,0

3,8

3,0

2,5

2,3

-0,3

-2,7

-3,0

India

China

Emerging and developing Asia

ASEAN-5

Emerging markets

Sub-Saharan Africa

Emerging and developing Europe

MENA, Afghanistan, and Pakistan

Mexico

LatAm

CIS

Brazil

2015 2016

Source: IMF’s World Economic Outlook, October 2015

1. Real per-capita GDP, cumulative change over the period 2007–2014

Source: IMF’s World Economic Outlook, October 2015

2. Real GDP Growth rate forecast, emerging market economies, (annual % change), 2015–2016

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7Editorial Staff

"MADE IN ITALY" BUSINESSES ABROAD. IN 2015 THE INVESTMENTS GO UP

There are over 22 thousand Italian companies abroad which generate a turnover of about €540 billion. Focus on foreign markets is a priority for 80% of the enti-ties. And cost savings is not the main reason for interna-tionalization anymore.

ALESSANDRO SEREGNI

FEATURED STORY /

Italian businesses focus on foreign coun-tries and internationalization to extend the market, increase the business and overcome the critical economic situa-tion. It is also confirmed by a growth in Italian acquisitions abroad. The study elaborated by the Zephyr database of Bureau van Dijk and the Analysis Unit of Bank BNL of the BNP Paribas Group confirm this trend. Italian investments abroad exceed €3.6 billion which is €1.7 billion more compa-red to 2014. Such an increase bodes well for the recovery of good performan-ce in the previous years: €13 billion in 2011, €6.7 billion in 2012 and €9.6 billion in 2013. A disproportion in terms of the amounts that foreign investors put into the market still remains and it currently totals €74 billion. It is important to underline howe-ver, that foreign companies usually ac-quire minority shares (58% of cases), whereas the Italian ones, if they move to-wards other markets, prefer to be in control of the entities acquired. But that is not all. Italians frequently ac-quire large-sized enterprises with over 80 staff members versus the average of 3.7 typical of the entities based in Italy. The figures relating to the "made in Italy" companies based abroad are as follows: there are slightly less than 22 thousand of them, they employee almost 1.8 mil-lion persons and their turnover exceeds €540 billion. Their capacity to generate wealth is increasing, as the turnover shif-ted from the last year's €274 thousand to

8Image from Atlas Catalán, 1375 d.C..

€307 thousand, marking a 12% growth. They are mainly located in the European countries, the United States and to a lesser extent in China. When it comes to the Old Continent, Italian busines-ses prefer investing in the countries such as Roma-nia, Great Britain, France and Germany. It is a strong trend from the economic and fi-nancial point of view, also for 2015, if we exclu-de huge operations such as those conducted in the insurance segment in Holland by Gene-rali and that in the oil&gas which SNAM carri-ed out in Austria. The macro-sector with the increasing presence is that of services, which encompasses more than 13.3 thousand businesses (over 60% of the total). About half of them operate in commer-ce and almost 1,500 in the financial and insuran-ce sector. In constructions, there are slightly mo-re than one thousand foreign enterprises control-led by Italian capital, whereas more than 6,500 of them operate in the manufacturing sector,

being mostly present in the machine, metal and textile industries. What does the "made in Italy" companies drive to invest in acquisitions abroad? Accor-ding to the Analysis Unit of BNL, the reasons are different from those a few years ago, at least when it comes to the order of priorities. One of them is the advantage in terms of pro-duction cost (and especially work) which – as the researchers write – “for a long time appea-red to determine the business choices relating to internationalization, whereas now it has consi-derably declined in importance.” Nowadays, internationalization is considered, above all, a way to open new business opportu-nities, meet new demands and increase the number of end markets.

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22.000italian

companies abroad

3.6 billion € italian

investments (2015)

1.8 million of person employed

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INTERNATIONALIZATIONOFITALIANELECTRONICSANDELECTRICALENGINEERING

Technology industry consolidates competitiveness on foreign markets

In the recent years industrialization has covered a key role within the strategies of development of the Italian Electrical Engineering and Electro-nic Industry, both across the size of enterprise and the product profile. As a result of such tendencies, Italian electrical engineering and electronics are now increasingly globalized sectors. Despite a critical macroeconomic situation, in the past five years the balance of trade in the ANIE sectors conti-nued to be positive within the country, increasing from €11 billion in 2009 to almost €16 billion in 2014. Thanks to such performance, the ANIE sectors account for almost 15% of the total balance of trade of the Italian manufactu-ring industry.

The companies of the Italian electrical engineering and electronic sector ex-porting their goods account for about 40% of the total, which is twice as much as the average of the manufacturing sector (that is 20%). More than half of them are small- and middle-sized companies.

Editorial Staff

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In the past years an important factor which changed the face of the Italian indu-stry providing technologies was broader opening to foreign markets located away from the traditional European recipients of the sector’s exportation. In a criti-cal economic reality, in the period from 2008-2014, the exportation of the Italian electrical engineering and electronic industry to extra-EU markets marked an average annual growth of almost 2.0%, versus a slight increase in the volumes exported to the European market.

The Middle East, emerging European countries and Latin America are some of the areas where internationalization strategies have been directed in the recent time. In the course of 2015 the first signs of recovery in Europe allowed the Italian electrical engineering and electronic businesses to take the opportunity of growing also in more mature markets. The macroeconomic scenario which is shaping up for the present two-year period outlines an increasingly complex picture for the businesses with the prospects for growth both in the traditional and developing markets.

New key players of the global growth support the recovery

According to the recent outlooks of the International Monetary Fund, it is expected that the global GDP will go up to 3.5% in 2016 and 3.8% in 2017. Under such circumstances, new key players of the global growth are emerging. At the time of the slow-down in the main BRIC countries, the expectations of development in new markets are consolidating. In parti-cular, extra-European areas which are revealing significant potential of growth includes, among others, Sub-Saharan Africa which sees consolidating consumption and investments. Also Latin America is characterized by the presence of rapidly developing markets and an increasing demand for infrastructure. A positive economic trend is expected in the emerging countries in Asia as well. Despite uncertain circumstances, important poles of growth persist both in North Africa and the Middle East. The factors that are shaping the new global scenario also encompass the renewed political balances deriving from international agreements with strategic economies such as Cuba and Iran.

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Editorial Staff

ITALIAN STORIES /

CMC of Ravenna – important procurements between Kenya and Sweden Important contracts for CMC, Cooperativa Muratori Ce-mentisti, a construction company based in Ravenna. At the end of December it was awarded – in Joint Ventu-re with Itinera (Gavio Group) – two contracts, the subject of the call for tenders issued by Kerio Valley Deve-lopment Authority, of a total amount of $575 million. The projects regard financing, designing and con-struction of two hydroelectric plants in the northwe-stern area of Kenya. The first plant, of 45MW, called “Embobut Multipur-pose Dam”, worth $281 million, will be built around 150 km away from the city of Eldoret (about 450 km from Nairobi); it encompasses the creation of a 92 m high rockfill dam, a transfer tun-nel, a power station, transmission lines and ancilla-ry works; it also includes irrigation works on a sur-face of 2,000 hectares and those of industrial and domestic distribution, serving 500,000 people. The second plant, of 60MW, called “Arror Multipur-pose Dam”, of a value of more than $292 million, is located around i 75 km away from the city of El-doret; it encompasses the creation of a 90 m high rockfill dam, a transfer tunnel, a power station, transmission lines and ancillary works; it also in-cludes irrigation works on a surface of 6,000 hec-tares and those of industrial and domestic distri-bution, serving 500,000 people. In the Scandinavian country, CMC – in that case in joint venture with Vianini Lavori – was awarded a contract of €400 million to build two road tun-nels of the bypass of Stockholm, between Lovön and Ekerö. This procurement was granted at the beginning of 2016 and its duration is 6 years. The Group, with a turnover of about €1.1 billion, a contract portfolio of more than €3 billion, and about 8 thousand employees, has for years been present in international markets which account for 60% of the company's procurements.

Imesa the winning bidder in the GulfImesa, the company of Schiavoni Group based in Jesi (Ancona) has been awarded a contract worth €7 million by Petrofac, a global operator of services for the Oil & Gas sector, with a strong presence in the United Arab Emirates and the area of the Persian Gulf. The procurement included the supply of electri-cal boards intended for the Kuwait National Petro-leum Company (KNPC), a state-owned refining com-pany of Kuwait, in the scope of an important activity of redevelopment of the refinery in Mina Abdullah. The supply encompasses 33 medium voltage electri-cal boards of 6.6 KV, an overall of 450 compart-ments, besides the support in commissioning and launching a service point in Kuwait to provide conti-nuous assistance to the clients.It is an important result for both the profile of the con-tractor that is Petrofac, a large-sized group of 20 thousand employees with an increasing presence in the Gulf area, and the significance of a hi-ghly technological project, the Clean Fuel Proj-ect, which aims to modernize the refining plants in Kuwait. Imesa is another enterprise that looks abroad as its main end market of their business, in that its turnover outside Italy accounts for 80%.

€100 million to build a highway in RomaniaRecently Impresa Costruzioni Giuseppe Maltauro ba-sed in Vicenza has been awarded a contract for the construction of the highway section Brasov – Targu Mures – Cluj – Oradea, Romania. The Italian company operates in that country through its own direct personnel employed in a branch opened in the past months. The procurement encompasses design and con-struction of a dual-carriage highway section of 16.8 km, consisting of 15 viaducts of a total length of 2.7 km, a highway flyover on three spans of around 72 m, a 54 m long box-type subway, two parking areas and other minor works.

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The construction time is 6 months to create the de-sign and 12 months to complete the works after their start date.By virtue of this contract Maltauro Group consolida-tes further and increments it presence abroad, where it concentrates 68% of the total turnover of the Group, amounting to €545 million in 2014 and estimated at about €521 million by the end of 2015.

Convert Italia operates in the largest photovoltaic park in Brazil Italian company Convert participates in the creation of the largest photovoltaic plan in Brazil, a park of 260 MW, located in Ituverava in the state of Bahia. The company was awarded a contract worth about €20 million to produce the TRJ tracker – a single-axis solar tracker patented by Convert – which in-creases by an average of 25% the performance of photovoltaic plants. Thanks to the Brazilian procure-ment, the enterprise based in Rome will produce 1 GW of trackers and 1.7 GW in 2017, becoming one of the first five world leaders in the sector.In Belo Horizonte Convert has also established the new Convert do Brasil Ltda, which will manage the supplies, the assistance and the production of the structural components of the TRJ in Brazil, to service in South America, although the techno-logical part will still be manufactured and develo-ped in Italy.

Iraq, Trevi wins the contract for the dam in MosulTrevi Group based in Cesena is a winner of the con-tract for repairs of the dam Mosul – previously called the “Saddam” dam – in Iraq. It is both an important and delicate operation, considering political instabili-ty of the Middle Eastern country and the conditions of the dam, which runs the risk of falling due to the absence of maintenance and negligence. The procurement was announced by spokesperson of the Iraqi government, Saad al-Hadithi, who explai-ned that the contract includes reconstruc-

tion and maintenance of the structure, worth $230 million.The works to be performed on the dam do not regard the topside of the structure, but the be-lowground one, due to the geological features of the area; the most urgent interventions concern protection of the foundations of waterways. Possible collapse of the structure could lead to extre-mely dangerous situations for the city of Mosul and the surrounding land. The alarm on the state of the dam has been raised since 2007, when the studies conducted by the United States underlined fragility of some of its parts. As mentioned above, technical difficulties are coupled with environmental issues: the structure is located in an area of extreme politi-cal and military instability: in 2014 the ISIS militants took over the dam for a short time. The Group, founded in Cesena in 1957, has more than 30 offices and is present in over 80 countries; in 2014 its turnover exceeded €1.2 billion.

Condotte awarded contract for railroad infrastruc-ture in Norway Società Italiana per Condotte d’Acqua is the winner of the tender for works in the scope of the railway project Follo Line issued by the Norwegian railway company (Jernbaneverket-JBV), the main infrastruc-tural work, currently developed in the country in Nort-hern Europe. This procurement, worth €225 M, is the second con-tract that the Italian group has been awarded in the framework of the same project in Norway in the re-cent few months. The work consists in building of around 1.2 km of arti-ficial concrete tunnels (box-type), of different sec-tions able to contain up to 7 platforms, including con-nections with the central railway station in Oslo. The procurement also encompasses construction of two technical buildings. Considering specific geological configuration of the area, concrete elements, inser-ted between sheet piling will be seated on micropi-les. Moreover, consolidation measures with L.C.C (Li

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me Cement Columns) and jet-grouting are planned for the layers below the foundtion.The structure is located at one end of the heart of the central railway station in Oslo and it is connected to the lot defined as Drill and Blast (tunnel dug with the help of explosives) already under construction by Condotte.

China, Italian technology and research in the lar-gest solar power plant in the worldThe latest generation lightweight solar panels manu-factured by the Group based in Veneto Reflex Solar di Biancade (Treviso) will be used in the largest ther-modynamic solar power plant. The plant will be built along the Silk Road, between Tibet, Mongolia and Kazakhstan. The initial capacity of the power plant will be 55 megawatt, which upon completion will be increased to 2 thousand.The procurement worth €14 million includes both the license to construct the first tranche of 6 million of special mirrors in China and the supply of the neces-sary production plants. An important novelty is also the choice of the techno-logy, which is the result of the Italian research. This is the first large thermodynamic power plant with parabolic trough collectors and molten salts. The Molten Salts technology was developed by ENEA since beginning of year 2000, inside the Archi-mede Solar Thermodynamic project, at that time ma-naged by the Nobel Prize Carlo Rubbia. The use of the molten salts, instead of the diathermic oil - pre-sently used in this kind of plants – , gives various advantages such as: Temperature Increase at the solar field exit up to 550°C against the 400°C obtai-ned with the diathermic oils, with significant increase of the thermodynamic cycle performance of the elec-tric production (approx. 4 - 5% more). The molten salts do not present any danger in case of acciden-tal leakage from the plant circuits because they are not inflammable, non-toxic and they become solid rapidly if in contact with the ground with the possibili-ty to collect them with mechanical tools, without any

kind of pollution. Furthermore as they are commonly used in agriculture as fertilizers, they are not dange-rous to the environment.Finally, dispaciability thanks to the high temperature thermal storage producing  “Energy on Demand”.

Italian construction sector is expanding and it looks at foreign countriesPizzarotti, a large-sized company, is focusing on fo-reign countries, especially the following four areas: the United States – New York in the first place; Ea-stern Europe – beginning with Russia through Roma-nia, Poland, Moldavia and Montenegro; the Middle East, above all Kuwait and Saudi Arabia; in addition to the Principality of Monaco and France. The recent contracts awarded include, among ot-hers, a huge project worth €700 M for building the Maternity Hospital di Kuwait City, along with another hospital complex in Al Amiri.In the American continent in turn, a 70-story sky-scraper worth 200 M is being constructed in Broad Street, which will become the second hi-ghest building in the Financial District. The con-struction value of the One Seaport is estimated at 70 M, whereas the price of the Jardim com-plex in Chelesea, designed by the Brazilian ar-chitect, is 60 M.As far as Europe is concerned, Pizzarotti was also assigned two lots for the Grand Paris proj-ect relating to the underground in Paris. Finally, in Eastern Europe the company recently won a contract for the Garage Museum and Gorky Park, as well as a prestigious resort. At the sa-me time, three different contracts were closed in Poland. They regard design and construction of three sections of the express road S5 of an ap-proximate value of 210 M. In Moldavia in turn the company closed a deal worth 50 M relating to the project of restructuring of the R16 road. The company’s goal for the future is to continue to invest in internationalization, consolidating the results achieved so far.

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Iran, the end of sanctions opens the door to Italian businesses Lifting of the sanctions imposed on Iran, opens the door to business and Italian companies that are the first to reestablish economic and financial relations.Among the Italian enterprises are also Pessina Co-struzioni, which recently signed an agreement with Iran’s Ministry of Health for construction and manage-ment of five hospitals in that countries. The health complexes will be built by means of a project finan-cing instrument which, apart from the construction works, provides for management of no-core and commercial services of the structure.It was only partly decided about the dislocation of the five commissioned hospitals. The first one, to be created in Tehran, will have 1000 beds, whereas the second one, with 500 beds, will be located in Rasht, in the region of Gilan. Its port Bandar-e-Anzali ma-kes it the most important trade center between Cau-casus, Russia and Iran.In turn the third hospital facility, also with 500 beds, will be built in Nishapur, the main city of the region of Razavi Khorasan. Building of the remaining two ho-spitals, despite being set forth by the agreement, is yet to be defined.

Energy brings its solutions to San Francisco – from RoveretoThe Californian market of solutions for energy optimi-zation has been recently accessed by a new compe-titor Energy namely, a young company based in the region of Trento, which set up its subsidiary in Berkley, San Francisco.The company, which in the U.S. is known under the name of EOT Solutions, where EOT stands for Ener-gy Of Things, offers solutions which make domestic power systems as efficient as possible. How? Thanks to a system which allows different types of technologies to communicate among each other, ex-changing information and dialoguing, in order to opti-mize consumption, saving and accumulation of the

energy produced. The type of the technology adop-ted enables this system to be applied both at the household and industrial or district level.It is an integrated model where the panel talks with the battery, which in turn talks with the refrigerator and the home automation management system. All large kitchen appliances and co-generation compo-nents communicate with each other to maximize energy saving and optimize comfort, home automa-tion functionalities and long life of the materials.For higher versatility and efficiency, the Energy Of Things system is able to manage information digital-ly and remotely, so each element of furniture or con-sumption, from the car to the inverter, from domestic batteries to photovoltaic panels, could be controlled remotely. The Californian market is rather challenging for a small and young company, which yet would like to remind that the “Made in Italy” is widely recognized and appreciated. According to the company’s heads, these features coupled with the requirements of the American market, will make the solutions offe-red increasingly complete and efficient.

Sace opens a new office in Dubai, new projects worth more than €5 billion plannedSace, a company offering the services of export cre-dit, credit insurance, investment protection abroad, financial guarantees, deposit and factoring, opens a new business unit in Dubai which will become a refe-rence point for the activities on the Middle East and North Africa markets. Fortified by a financial, commercial and logistic role of Dubai at the regional level, the new office of Sace will deal with a portfolio of insured transactions and guaranteed investments worth more than €5 billion, of which 70% is concentrated in the Gulf Countries, and a pipeline of new projects under analysis of an overall value of more than €5 billion. The services or-ganized in the area and the support of Italian busi-nesses which are opening to these mar-

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kets is crucial for Sace.In 2015 alone, the Italian export to the Emirates exceeded €5.5 billion and a drive towards a diver-sified economy, with the state-of-the-art infrastruc-ture, stimulates the entire region with the in-vestment projects from infrastructure to the consu-mer goods sectors. This trend may lead to a growth in Italian exportation by over €2 billion by 2018. Possible markets include not only Oil & Gas, the chemical and petrochemical segments, but also those related to the tourism, the fashion, the agro-food industry, and different industrial technologies, in the scope of which Italian compa-nies, also SMEs, have a recognized know-how.

Internationalization thanks to innovation for Carel based in VenetoInnovation and internationalization are the guideli-nes of Carel, an Italian company based in the Pro-vince of Padua (Brugine), which will soon open its commercial branch in Bangkok, Thailand.Asia is not a new destination of the enterprise from the Region of Veneto, which already opened its branches in Hong Kong, Korea, Japan, India and China. Last year, to these consolidated bran-ches also business units in Mexico and Dubai we-re added, whereas a production plant was opened in Croatia.The overall activity in Asia accounts for 20% of the total turnover, worth about €180 M a year, and it is estimated that by 2018 the office based in Thai-land will increase the turnover by 40%.Thus the consolidation and broadening of the com-pany’s policy of internationalization are not surpri-sing and they confirm the previous management choices of the group specialized in the control solutions for the sector of air-conditioning, refrige-ration and air humidification.The decision of Carel therefore responds to a growing demand for high energy efficiency technologies and products.

As for the office in Thailand, the company will aim to confirm its position as a solid reference point for the sales of refrigeration control solutions, a scope in which an important growth is planned from 2016, as well as extend the offer in the air-condi-tioning segment.As a proof of the intensive activity of exportation – accounting for 80% of the production – improve-ment and analysis of its own products and offer, the company was the only European business to receive the AHR Expo Innovation Award 2016. The prize was awarded in the category of refrige-ration, precisely for the solution called “Carel HEOS Sistema.”The American award recognizes the HVACR (Hea-ting, Ventilating and Air Conditioning) products present in the market of the most innovative, effi-cient and environmentally friendly technology.HEOS Sistema – High Efficiency Showcase Con-troller – is a solution designed and manufactured in Italy. It is intended for management of display cabinets and cold rooms in supermarkets ensu-ring higher energy efficiency (25%) and a signifi-cant saving on electricity and CO2 emission, mo-re accurate temperature control inside the cabi-net for better food preservation, a drastic reduc-tion in the total load of refrigerating gas (-80%) and the relevant losses (-96%) within the system compared to the traditional architectures with a refrigerating station.

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ITALY IN THE TOP TEN LIST OF REGENERATIVE MEDICINE STUDIESEditorial Staff

Repairing tissues and organs damaged by disease, trauma or simply aging, using the capacity for auto-regeneration of the human body. It’s the objective of the project MERIT, of which ENEA (Italian National

Agency for New Technologies, Energy and Sustainable Economic Development) is scientific director, opening a new frontier in the treatment of severe diseases like cancer, muscular dystrophy and diabetes but also in

the  development of new drugs.

Research conducted under the project MERIT has achieved wide recognition and was listed in the top ten results of the last 30 years by the authoritative peer - reviewed journal “STEM CELLS”. The signifi-cant progress made by tissue engineering has crea-ted a new field of application of biotechnologies that, according to EU estimates, is expected to gene-rate a business turnover of over 300 billion euro in the next 15 years.Tissue engineering is the new frontier in biomedici-ne, providing an alternative to transplant, with the objective of repairing or replacing tissues and or-gans like muscles, bones and cartilage damaged by disease, trauma or even aging, restoring their inte-grity and functions.  These are the findings of the project MERIT, on the new frontiers in rehabilitation, proposing innovative techniques and models for the regeneration and reparation of tissues in conditions associated with a significant loss of muscle mass. An actual “tissue factory” that has achieved valuable scientific results, such as the in-vitro replication of portions of skeletal muscle tissue.  The research, of which ENEA is scientific director, was listed in the “top ten developments” of the last 30 years by the authoritative international journal “STEM CELLS”, both for basic and applied research and for clinical and research applications.The project MERIT (Innovative models of tissue re-pair and regeneration in orthopaedic trauma)  stems from a collaboration among international partners, including the San Raffaele Foundation, which has been committed to stem cells research for many years, the CNR, coordinator of the project, the University of Rome “La Sapienza”,  the University of Pittsburgh, the Université Marie & Pierre Curie (Sorbonne Universités), the University of Leipzig and the In-dian Institute of Technology.This high-level multidisciplinary net-work, called by those operating in the sector “complex network” has fostered a

broad collaboration among experts from different fields and frontier technologies , an added value granting MERIT the publication on international journals with a high impact factor- an established measurement of research quality- and recently al-so on the International Society for the Advance-ment of Cytometry web site.“Thanks to increasingly innovative technologies and progress in research in the field of biomaterials and other related sciences, this sector is paving the way for new treatments and is most likely to revolutionize medicine – said Laura Teodori, scientific director of the project for ENEA. Furthermore, by reproducing  in laboratory the in vivo system, could significantly contribute to discovering new drugs“.The advancement in research on tissue engineering has already led to the creation of a new commercial sector, that of biotechnology, in Europe: according to EU estimates, in the next fifteen years tissue enginee-ring and regenerative medicine will generate a busi-ness turnover of about 300 billion euro. In the United States, the Government Agency for research in bio-medicine (National Institute of Health) has foreca-sted that in a fifteen year time period the evolving global stem cells marketplace is expected to grow four times  and is destined to increase exponentially, notably in the sectors of neurology, orthopaedics, organ regeneration, cardiovascular and urology sur-gery and skin wound management.

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The Department of Electronics,

Information and Bioengineering

at the Technical University of

Milan, in cooperation with Mes-

se Frankfut Italia and ANIE Au-

tomazione have launched a proj-

ect entitled “Mapping Mechatro-

nic Competencies in Italy”.

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Marta Mazzanti

Mapping Mechatronic Competencies in Italy

The aim of the research is to examine and monitor innovation capacities of the Italian segment of auto-mation and mechanical industry, with reference to the European reindustrialization related to the initiati-ves of Smart Factory and Industry 4.0.Picturing the current situation in the segment is the first step to connect the world of education with the representatives of automation, centering around the needs of business on the one hand, and on the state of research on the industrial automation on the other hand. The study involved the Provinces of Brescia, Verona and Mantua with a total of 570 businesses concer-ned. Heterogeneous features of the enterprises ma-de it necessary to elaborate a classification by area (analysis of the segment’s businesses located in the cities of Brescia, Verona, Mantua and the relevant provinces), economic sector (manufacturing sec-tor that encompasses factory automation and ma-chines for industry) and profile (mechatronics and industrial automation).The ultimate goal of the research is also to expand the area of study, among others in terms of geo-graphic profile.The businesses participated in the research by re-sponding to an online questionnaire, and they were available for further in-depth analyses on particularly important case histories.

The survey indicates that according to the responses of the businesses interviewed, about 80% of the com-panies are profitable and they are aware of the entre-preneurial aspects aimed at evolving towards a Smart Factory. Nonetheless, in spite of a significant interest in industrialization of 4.0 type, there is an absence of the command of the process of attaining such objecti-ves and transitions modes in a digitalized factory.The figures related to this matter reflect the fact that 80% of the businesses declare to be aware of the changes taking place in the manufacturing sector, but 60% of them admit that they are not taking mea-sures aimed at transformation into the 4.0 industry.At the same time, 13% moves towards the 4.0 indu-strialization at a regular pace, 14% are strongly orien-ted to that direction.What is more, only 16% of the sample interviewed, employ the personnel necessary for a transition to-wards a more advanced industrialization, whereas 13% have IT resources.The data also indicate the need of a spur towards a digitalized industry, considering the premises and a significant interest of the businesses.

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Liberalization and integration of electricity mar-kets in the European Union has made impor-tant steps forward in almost twenty years sin-ce the first directive (no.1996/92/EC) in this re-spect was adopted. However, the progress was uneven, in terms of both the results achie-ved by specific member states and the extent of opening at different stages of the chain. The-re is no doubt that under this profile the wea-kest link of the chain is that of retail markets.

Liberalization of the electric power

retail market between European

prompts and English backtracking

CaRlo sTAGNARO

Ministry of Economic Development

Head of Technical Secretariat

The asymmetry between the extents of deve-lopment, or rather – to be more precise - “re-structuring,” of the wholesale markets also derives from some structural elements that render their competitive revolution more com-plex. In particular, as Joskow (2008) ex-plains, “it is presumed that competition is good for large consumers, for whom the tran-sition costs are lower, the opportunities of the risk and demand management are grea-ter, and it is supposed that the consumers are capable of buying [energy] in a smart way.” The words of Joskow presuppose, in particular great attention to the regulation of retail markets and the modes adopted in practice to protect the consumers. At the sa-me time, however, they point out to the need of not departing too much from the “textbook model of restructuring.”In respect of his concerns, expressed almost ten years ago, some aspects of utmost im-portance have changed now: basically, owing to the technological progress and dif-fusion of smartphones, smart applications and smart technologies (and increasingly smart meters), the transition costs have con-siderably dropped also for small consumers. More and more countries (recently also Spain) are adopting solutions for real time pricing intended also for small consumers, whereas the control of consumption choices may be exercised more easily and with more awareness. The same availability and acces-sibility of information is bound to extend the prospects, contributing to reduce further the costs of transition.It is also likely that in the light of those deve-lopments the European Commission has put a new emphasis in its most recent docu-ments on liberalization on the retail markets. It points out particularly to lifting of the remai-ning price regulations or other public intru-

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sions in the consumers’ freedom of choice. Such emphasis is reflected in the communication on the Energy Union (EC 2015a) and it is even the sub-ject of an ad hoc communication (EC 2015b). From the Commission’s point of view, the complete opening to the competition in the retail markets, and overcoming the antiquated and paternalistic schemes of consumer protection, is not only a good thing in its own right, but also ancillary to a complete market integration. This will not allow

Balkanization forms, diverging from the European target model present at the wholesale level, to re-plicate in the retail model by virtue of a mainly na-tional nature of these markets. Indeed, the extent of opening of the retail markets appears extremely heterogeneous, although the last directive pack-age was passed a few years ago (IBL 2014).In the middle of this process, in which also Italy ta-kes part planning to abolish the “standard offer servi-ce” included in the annual bill on competition (1), the

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proposal of the Competition and Markets Authority (CMA, British Antitrust Authority) was a bolt from the blue. It put forward the introduction of a somewhat regulated, but only “temporarily,” form of price, with a view of protecting the “disengaged” clients. If the country, which Joskow (2008) defines as “the gold standard of the electricity reform” takes a step backward, is it justifiable that other member states of the EU go ahead? To respond to that question, it is ne-

cessary to look more closely at the inquiry and the proposals of the CMA (2015a e 2015b).

Return to the regulated prices in the United Kingdom: step backwards or optical illusion?The answer to that question could be that formally, the English Antitrust simply submit-ted two (for the time being, preliminary) pro-posals, which the OFGEM (the sector’s regu-lator) or the DECC (the competent “mini-stry”) can welcome or not. However, the analysis of the CME is worth a serious consideration.It touches upon different aspects. We will concentrate here on the issues and solutions determined in relation to the retail markets. In the first place, the CMA examines the re-tail markets the results of which significantly depart from the previous inquiry that the CMA conducted along with the OFGEM and the Office of Fair Trading (OFT, OFGEM and CMA 2014). In that case it was observed that the retail prices trend indicated that the dominant market operators (the “Big Six”) exercised excessive power. They pointed the finger particularly at the demand inertia, the suspicion of a phenomenon of tacit collu-sion among the operators, and the potential anticompetitive effects deriving from the ver-tical integration between the electric power generation and its sale (for synthetic recon-struction, see: Benedettini 2015). However, the preliminary results obtained by the CMA, disprove most of that interpretation. First of all, the CMA writes that a more detailed analysis of the available data, does not sup-port the thesis that increases in prices and margins are down to the tacit collusion or the vertical integration.Secondly, it underlines that the increase in prices is mainly directed by parafiscal com-

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ponents of the electricity bill, referring particularly to the social and environmental charges. Thus the emphasis is shifted to the consu-mers’ inertia: according to the CMA, the most impor-tant item of data indicates that about one third of do-mestic clients have never changed their supplier and have no intention of doing so. This is even more preoccupying, if we consider scarce inclination to-wards switching. This applies especially to the lower education and lower income persons (moreover, the-se two features tend to be positively correlated). Ac-cording to the British Antitrust, it is thus necessary to intervene on the demand side rather than on the sup-ply side. In the opinion of the CME, it is thus neces-sary to remove both the obstacles to the demand mobility, and identify the instruments to protect those consumers who do not intend changing the offer or supplier. The first group of measures include, among others, an in-depth revision of interventions that the OFGEM has introduced since 2009, particu-larly the so-called “simple choices” package. It limits the number and type of commercially practicable of-fers to ensure better understanding of alternatives available to the consumers. However, it is rather pa-radoxical that it reduced the offer variety and elimina-ted the least expensive offers. Moreover, the CMA points out that a great deal of comparison websites for the offers represent the cause of excessive poly-phony. It suggests creating an institutional site mana-ged by the OFGEM in order to provide more reliable information about which offers are most favorable, considering the clients’ needs and possible additio-nal components of the service in which they are inte-rested (for two alternative points of view on that mat-ter, see: Waddams 2015 and Littlechild 2015).Nonetheless, the CMA affirms that despite removing any barriers to the demand mobility and creating conditions for more competitive commercial offers, there will always be a group of “lazier” consumers. Such consumers must be protected to prevent the operators from exercising market power over them. At present, the consumers actually do not opt for

any specific offer, whereas those who signed for an offer than then expired, are made to return to the “standard” (and less favorable) offers of the Big Six. As a consequence, the CMA suggests introducing some “transitory safeguards for inactive consumers.”Contrary to some journalistic simplifications, the CMA is not proposing a real return to regulation of retail prices through different price caps. It is fully aware of the fact that this “could have a massive im-pact on the competition in that actually an extensive price regulation would be generally introduced on retail markets.” As a consequence, such a transitory safeguard could leave some “room for maneuver:” indeed, the “regulated” prices must be neither too low (because in such a case “they would affect the competition, undermining the incentive for the consu-mers to be active in the market”) nor too high (“at best, they would not provide any protection to the consumers; at worst, they would potentially provide a higher focal point to stipulate standard offers”).It appears that the CMA suggests a real policy of last resort. Yet, it is not free from contradictions: so-me of them arise in examining the situation in Italy.

London, ItalyThe current system of the “standard offer service” in force in our country, actually appears not to be far apart from what the CMA hopes to introduce in Great Britain. Referring to the description provided by the core entity of the standard offer service, that is the Single Buyer, “the price of the standard offer service is an administered price, as it reflects the wholesale market which constitutes a benchmark for the end client, in order to compare offers in the free market and evaluate their congruence” (AU 2015). In practice, the standard offer price is construed in a way to “mime” what one would expect of the beha-vior of a market operator, in that in contains a compo-nent which reflects the estimated marketing costs of a new entrant.Even if we take account of extremely complex cir-cumstances subject to numerous variables, it is pre-

31

cisely for that reason that the CME believes that the introduction of a similar mechanism could be a ga-me changer in the UK. This may not be considered the “elephant in the room” in Italy. The Table below shows a comparison between Italy and Great Britain in relation to the main indicators of the assessment conducted so far. It refers particularly to both the measures for inactivity of inactive clients (for examp-le the number of consumers who do not switch) and activity of active clients (for instance, the switching rate). In other words, the policies must aim to reduce the number of inactive clients and make the active ones as dynamic as possible.Table 1 does not provide answers, as it rather indica-tes some descriptive elements. In particular, it does not take account of a series of factors that can have an important impact on the consumer behavior: the switching time and invoicing, difficulties obtaining information, etc. However, it is significant that each indicator of the consumer engagement in Italy per-

forms worse than in Great Britain. Undoubtedly, a great deal of reasons may contribute to explain that phenomenon, but it is difficult to ignore the presence of the standard offer service and its effect on the be-havior of consumers and operators. In other words, the solution that the CME proposes for Great Britain does not appear efficient, at least in terms of promo-ting proactivity of the consumers, in a country where a similar mechanism is in place.The comparison seems rather to raise a series of questions: to what extent should the disengaged clients be protected, and to what extent should the consumer protection policies be devised on the ba-sis of a “lazier” consumer instead of, for instance, an average consumer? Should the public policies deal with all those who do not switch the supplier, or only those in particular situations, such as low income fa-milies? Is it possible that a reference public offer in place could make the consumers feel “more pro-tected” and thus reduce further their inclination to be

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mobile (Waddams 2015)? Is it possible that the avai-lability of standard offers, with an aura of public pro-venience could disincentivize modernization and dif-ferentiation of the offers, favoring the perception that the subject of transitions is a mere kWh rather than a complex service package (for example, energy effi-ciency)? What are the consequences of a benchmark in place and in particular, does it act as a focal point or not?It is difficult to answer these questions without con-ducting in-depth analyses, which still lack adequate data. And yet, they appear reasonable in the light of a brief comparison made in this article, in considera-tion of both broader evidence gathered by the ACER (2014), which precisely on that basis puts a great emphasis on overcoming price regulations and in-struments that produce similar consequences. The feedback which the CMA received from a group of former British regulators appears to be moving exactly in that direction, warning against unintentio-nal outcomes of the choices of radical change (Little-child et al. 2015).In conclusion, liberalization of the retail market is ba-sically the unwalked ground, also because the conti-nuous transition of the cost reduction due to the technological evolution is changing the scenario ve-ry rapidly. It is important to notice not only the risks, but also the increasing opportunities for the competi-tors. For this purpose however, it is necessary to couple liberalization with an accurate and open mar-ket design. Getting back to Joskow, it is basically about a market design that would not depart from the “textbook model” and concentrate on the situa-tion of competitive operation rather than patronizing demands to determine its outcomes.

BibliographyACER (2014), Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2013, ACER, Lju-bljana, SI.AU (2015), “Indagine conoscitiva sui prezzi dell’energia elettrica e del gas come fattore strategico per la crescita del sistema pro-duttivo del Paese” [Preliminary inquiry on electricity and gas pri-ces as a strategic factor for a growth in the country’s production system], Memoria per il seguito dell’Audizione presso la X Com-missione Industria, Commercio, Turismo del Senato [Report from the hearing at the 10th Commission for Industry, Commerce and Tourism of the Senate], 15th May 2015.BENEDETTINI, S. (2015), “Energia e retail: la (vera) lezione del Regno Unito” [Energy and retail: the (real) lesson of the United Kingdom], Staffetta Quotidiana, 17th June 2015.CMA (2015a), “Energy market investigation. Provisional findings report,” 7th July 2015.CMA (2015b), “Energy market investigation. Notice of possible remedies,” 7th July 2015.EC (2015a), “A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy”, COM (2015) 80 final.EC (2015b), “Delivering a New Deal for Energy Consumers,” SWD (2015) 141 final.IBL (2014), Indice delle liberalizzazioni [Index of liberalizations], IBL Libri, Turin.JOSKOW, P.L. (2008), “Lessons Learned From Electricity Mar-kets Liberalization,” The Energy Journal, Special Issue. The Futu-re of Electricity: Papers in Honor of David Newbery.LITTLECHILD, S. (2015), “A Regulator’s Price Comparison Web-site is Not Sensible: comment on Catherine Waddams’s blog post,” University of East Anglia – Centre for Competition Policy, Competition Policy Blog, 9th July 2015.LITTLECHILD, S., MCCARTHY, C., MARSHALL, E., SMITH, S. e SPOTTISWOODE, C. (2015),“Submission on Summary of Provisional Findings and Notice of Possible Remedies.” 16th July 2015.OFT, OFGEM e CMA (2014), “State of the Market Assessment”, 27th March 2014.WADDAMS, C. (2015), “CMA Provisional Energy Market Fin-dings: Does protecting the weak (even temporarily) make them stronger?,” University of East Anglia – Centre for Competition Policy, Competition Policy Blog, 7th July 2015

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Mediterranean: facing unprecedented energy challenges Tiziana TronciMEDREG Secretariat*

The Association of Mediterranean Energy Regulators (MEDREG) brings together energy regulators of 21 countries around the Medi-terranean in order to promote a clear, stable and harmonized legal and regulatory framework through a continuous cooperation among the Northern, Southern and Eastern shores of the Mediterranean ba-sin. MEDREG’s Secretariat is located in Milan, hosted by AEEGSI, the Italian Regulatory Authority for Electricity, Gas and Water.

*The material for the article has been elaborated by MEDREG Secretariat

Mediterranean national energy markets are today at very different degrees of maturity. In the Sout-hern shore utilities are state-owned and operate either based on vertically integrated service provi-ders or using a single buyer model. Most of these utilities are running at high degree of subsidies, they are not cost reflective and do not provide a right price signal for private investors. Therefore, most of the investments are financed by the state budget. However, states face increasing difficulti-es in keeping the current level of subsidies and the reformation of the electricity and gas sectors are being discussed in various Southern countri-es. Egypt, for example, is currently designing a substantial reform of its electricity sector. The presence of independent regulators is pivotal to guarantee that reforms balance between the needs of investors and consumers, and to subsequently provide investors with a clear framework of rules. Indeed, MEDREG dedicate increasing attention to enhance the level of efficiency interoperability and the quality of planning of energy infrastructu-res. Creation of adequate, integrated and reliable energy networks is a prerequisite to deliver a pro-perly functioning energy market that will enhance security of supply, integration of renewable ener-gy sources, energy efficiency and will enable con-sumers to benefit from new technologies and a smart use of energy. The establishment of an appropriate and effective Mediterranean energy framework is a key factor to build an environment that fosters sustainable development. Through the activities of its Working Groups on Electricity, Gas, Renewable Energy Sources and Energy Efficiency and Consumer Is-sues, MEDREG supports a more efficient infra-structure system with monitored energy flows both for electricity and gas, to create the condi-tion for a competitive regional energy market. Meanwhile for countries where a working legal frame-work already exists, it is important to maintain and im-

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MEDREG gathers 24 electricity and gas regulators from the following countries: Albania, Algeria, Bosnia-Herzegovina, Croatia, Cyprus, Egypt, France, Greece, Israel, Italy, Jordan, Libya, Malta, Monte-negro, Morocco, Palestinian Authority, Portugal, Slovenia, Spain, Tunisia and Turkey.

prove market conditions in order to balance industrial initiatives and consumer protection for the benefit of all parties.In order to provide the vision of Energy Regulators on the situation of Infrastructure investment in the Mediterranean region, MEDREG developed a re-port that maps current and projected interconnec-tion infrastructures for electricity and gas and di-scussed the challenges to finance them properly in the absence of an harmonized regulatory fra-mework. This report assesses the main bar-riers that represent an obstacle to efficiently using existing infrastructure and financing new projects.Regulators and stakeholders agree on the 3 main barriers that hinder the development of investments in energy infrastructure in the Mediterranean re-gion: political instability and lack of a clear institutio-nal framework; lack of internal reforms; insufficient market demand. In February 2015, MEDREG submitted the draft re-port to its first public consultation. The exercise was positively considered by Mediterranean ener-gy stakeholders with a total of 37 contributions re-ceived, of which 8 governmental agencies, 6 TSOs, 7 think tanks, 4 non-governmental organizations (NGOs), 4 producers and suppliers, 2 international institutions, 3 consultants, 2 academics and 1 finan-cial institution. Based on the outcome of the consultation and of the workshop, MEDREG identified the following re-commendations considered as a necessary to faci-litate the creation of a sound environment for in-vestments in the Mediterranean region:

Establish competitive and stable energy marketsPromote deeper harmonization of national regula-tory frameworksIncrease the use of existing interconnections in the Southern shoreEvaluate the economic benefits of new cross-border infrastructure projectEnhance cooperation between regulators and TSOs

Design a Ten-Year Network Development Plan for the Mediterranean regionIdentify projects of Mediterranean common interest Support technology innovation to improve the condition of vulnerable consumers

In terms of future projects, most Mediterranean cross-border electricity interconnection projects are currently in their feasibility phase. This is a signal that potentially they are several steps away from the actual construction of the project. So far, Alba-nia and Croatia are the only two countries that suc-ceeded in passing the financial step and enter the permitting phase of their projects. Eighteen proj-ects have passed all steps and are now in their con-struction phase.The European Union has identified twelve priority corridors and areas covering electricity, gas, oil and carbon dioxide transport networks. It proposes a regime of "common interest" for projects contribu-ting for the implementation of these priorities. Car-rying the label "projects of common interest" (PCI) these projects benefit from faster and more efficient permit granting procedures and improved regulato-ry treatment. They may also have access to finan-cial support from the Connecting Europe Facility (CEF), under which a €5.85 billion budget has been allocated to trans-European energy infrastructure for the period 2014-2020. For a project to be inclu-ded in the list, it has to have significant benefits for at least two Member States; contribute to mar-ket integration and further competition; enhance security of supply, and reduce CO2 emissions. As for gas, from 2018 onwards, the introduction of offshore resources coming from the Eastern part of the Mediterranean will make an important impact on Mediterranean gas markets. On the one hand the EastMed project will allow the transport of 8-14 bcm/year to the European consumers, being di-rectly connected to Greece and Italy via Posei-don pipeline. The Trans-Anatolian Natural Gas Pipeline project, on the other hand, will be fully

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operational in 2020, allowing 10-20 bcm of gas to be transported from Azerbaijan via Turkey (TA-NAP) to Greece, Albania and Italy through the Trans-Adriatic project (TAP) to become operatio-nal simultaneously.Through this report, MEDREG aims at encouraging an active debate among governments, international financial institutions (IFIs), Transmission System Ope-rators (TSOs), multilateral organizations, and the aca-demic world. MEDREG is confident that this report can represent a meaningful step to tackle and ad-dress barriers to energy investments in the Mediter-ranean region. The main data in support of this re-port were kindly provided by MEDREG members. The complete report, the annexes and the docu-ments related to the public consultation are available. On the basis of its experience, MEDREG considers that a sub-regional approach is particularly valid for a diversified region such as the Mediterranean one. The idea is not to have a “one-size-fits-all” approach but to create through different smaller sub-regional projects a dynamic so that national interests can pro-gressively converge. They can serve as test cases for different cooperation models and mechanisms. If one project succeeds, because a regulatory system for such projects was set up, then the attractiveness of the whole region for investors is likely to increase. When developing sub-regional projects it is also im-portant to guarantee/ensure their compatibility at regional level. MEDREG works to ensure cross-regio-nal coordination. On the other hand flexibility is nee-ded in the transitional period (e.g. allowing bilateral contracts for supply and for capacity allocation until regional exchanges and capacity allocation mecha-nisms are established). Regional roadmaps, such as the one MEDREG developed with Med-TSO in the context of the Union for the Mediterranean (UfM) Eu-ro-Mediterranean Platform on Regional Electricity Market (REM), could help guiding this transition in the upcoming years. Indeed, pilot projects represent the natural outcome of the work performed within the three UfM Energy Platforms for electricity, renewa-

bles and gas,, in order to avoid that these intiatives remain abstract political processes. The strategic interest and high level of participation of UfM countries as well as of energy stakeholders in the UfM Platforms process already demonstrates that this issue will remain a priority of the Euro-Med policy in the upcoming years. The Platforms represent a further opportunity for MEDREG to take part in this institutional process as a key organization for regional cooperation, to the benefit of Euro-Med energy markets and consu-mers.Lastly, MEDREG has just released its latest publica-tion “Evolution of the Mediterranean energy sector 2013-2015” that collects the Association's achieve-ments performed during the three years.A section of the publication shows the major results in terms of energy regulation obtained by MEDREG members. The reports issued by MEDREG Working Groups have been relevant to support Southern sho-re member regulators in achieving their objectives, testifying for the key role played by the Association in favor of the regulatory harmonization of the region.Fact-findings from the publication include the fol-lowing steps forward made by MEDREG members: the process of establishment of the Moroccan electri-city regulator and the Egyptian gas regulator is advancing; the reinforcement of institutional coopera-tion with Euro-Mediterranean energy stakeholders, such as the close cooperation with Med-TSO in the context of the UfM Euro-Mediterranean Platform on the Regional Electricity Market; the enhancement of knowledge about good regulatory principles and practice among Southern shore members as well as intensified exchange and publication of data on Me-diterranean gas and electricity markets.

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PETRONAS CHOSES TURIN FOR ITS GLOBAL RESEARCH CENTER EDITORIAL STAFF

BETTING ON ITALY/

Petronas Lubricants International (PLI) Group, a division of an international oil corporation, has chosen the Province of Turin, the Municipality of Villstellone, as a location for its new global re-search center.The Malaysian company will invest about €60 million in a project, which according to the estima-tes, will be completed by 2017. The new center will be built at the already operational business unit of the Petronas Group in Italy. It will have about 17 thousand square meters on an area of 80 thousand square meters. The structure’s cutting edge design will refer both to its architecture and respect for the environ-ment. In this respect, the complex will be able to convert mechanical energy, produced during the tests, into electric power, which will be consumed or transmitted to the grid. Moreover, the center will be a place of shaping technologically advanced and innovative projects. Whereas the Italian business unit is crucial for not only the Italian and European R&D initiati-ves but also the activities at a global level (the unit of Petronas based in Turin develops, among others, the lubricants that Mercedes uses in F1), it will be even more important after the new center will have been completed, which will set itself up as a global pole able to gear technological and technical needs of the business of Petronas in Asia, Africa, Latin America and North America.The operation will bring value and development in terms of both business and employment. In-deed, it is estimated that at least 100 new workplaces for researchers and highly qualified per-sonnel will be created. The company based in Kuala Lumpur has had a long-term connection with Turin, which consoli-dated with time and stems from cooperation with the automobile group FIAT and continued owing to downstream and upstream activities in the area of Turin and relationships with the ap-plied research sectors.

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