d6.3 white paper concerning innovative business stimulation v1.0

This project has received funding from the European Union’s Seventh Framework Program for research, technological development and demonstration under the grant agreement no. 609453.

DELIVERABLE Project Acronym:

MAGHRENOV

Grant Agreement number: 609453

Project Title:

Convergence between EU and MAGHREB MPCs innovation systems in the field of Renewable Energy and Energy Efficiency (RE&EE) – A test-bed for fostering Euro Mediterranean Innovation Space (EMIS)

D6.3 WHITE PAPER CONCERNING INNOVATIVE BUSINESS

STIMULATION

Version: 1.0

Authors: Refaat CHAABOUNI (ANME)

Internal Reviewers: Hugo Kerschot (KIC SE) Richard Biagioni (KIC SE) Claude Ayache (KIC SE) Oceane Elmajdoub (KIC SE) Mouhcine Benmeziane (IRESEN) Josep Bordonau (UPC) Abdelhak Chaibi (RD Maroc) Franck Hashas (ITEMS) Helene Ben Khemis (ANME)

Dissemination Level

P Public X

C Confidential, only for members of the consortium and the Commission Services

D6.3 White paper concerning innovative business stimulation

Table of contents

Table of contents ................................................................................................................................. 2

Revision History ..................................................................................................................................... 3

Acronyms and abbreviations ............................................................................................................... 4

Executive summary .............................................................................................................................. 5

Introduction ........................................................................................................................................... 6

I. Analysis of the current situation ................................................................................................ 7

II. Recommendations for innovative business stimulation ....................................................... 10

References ........................................................................................................................................... 17

© MAGHRENOV Consortium Version 1.0 2


Revision History

Revision

Date

Author

Organization

Description

0.1 18/01/2016 Refaat CHAABOUNI

ANME Initial draft

1.0 28/01/2016 Refaat CHAABOUNI

ANME Final version

Statement of originality: This deliverable contains original unpublished work except where clearly indicated otherwise. Acknowledgement of previously published material and of the work of others has been made through appropriate citation, quotation or both.



Acronyms and abbreviations CRTEn : Centre de Recherches et Technologies de l’Energie

EIT : European Institute of Innovation and Technology

EMIS : Euro-Mediterranean Innovation Space

ENPI : European Neighborhood and Partnership Instrument

EU : European Union

Euro-Med : Euro-Mediterranean

MPCs : Mediterranean Partner Countries

MS : Member State of European Union

PV : Photovoltaic

RE and EE : Renewable Energies and Energy Efficiency

R&D : Research and Development

STI : Science, Technology and Innovation

TSP : Tunisia Solar Plan



Executive summary

Support to innovative businesses in RE and EE domain constitutes the third pillar of MAGHRENOV project. The creation of new businesses is the key to foster the uptake of innovation to the market and make the Euro-Mediterranean Innovation Space a reality. The main objective of this White Paper is to stimulate the discussions, commitments and partnership building between the Euro-Mediterranean stakeholders and decision makers for the creation and development of innovative businesses in RE and EE domain. The findings of this White Paper are based on the comprehensive deliverables that have been produced in the framework of the MAGHRENOV project (work package 4: “Support to join innovation projects” and work package 5 “Support to business creation”) and on the various exchanges, discussions and meetings we had with several officials and stakeholders involved in the RE and EE domain and in the Euro-Mediterranean STI partnership. This document is divided into two parts:

• The first part is devoted to a brief analysis of the current status of innovative businesses creation in Morocco and Tunisia, the two southern Mediterranean countries members of the MAGHRENOV consortium.

• The second part deals with the identification of a series of challenges to be addressed and provides recommendations to stakeholders and decision makers on how to better deal with these challenges.

The following set of recommendations is discussed in this document:

• Promoting creation of spin-offs and innovative companies' in southern Mediterranean countries and valorizing the research results available in the Euro-Med region.

• Strengthening innovative capacities of local industry of RE and EE and encouraging the emergence of strong Euro-Med clusters.

• Promoting large scale projects and encouraging the increase RE and EE market demand in the southern Mediterranean countries.

• Initiate a dialogue between the MPCs and the EU to boost or re-launch mega projects in the field of RE across the Euro-Med region.



Introduction This White Paper on “Innovative Business Stimulation” is the third deliverable of work package 6 which is dedicated to policy support of the MAGHRENOV project outcomes. It follows a first White Paper on “New Educational Programmes” and a second one on “New Adequate Research Infrastructures”. The main objective of this document is to stimulate the discussions, commitments and partnership building between the Euro-Mediterranean stakeholders and decision makers for the creation and development of innovative businesses in RE and EE domain. The findings of this White Paper are based on the comprehensive deliverables that have been produced in the framework of the MAGHRENOV project (work package 4: “Support to join innovation projects” and work package 5 “Support to business creation”) and on the various exchanges, discussions and meetings we had with several officials and stakeholders involved in the RE and EE sector and in the Euro-Mediterranean STI partnership. This document is divided into two parts:

• The first part is devoted to an analysis of the current status of innovative businesses creation in Morocco and Tunisia, the two southern Mediterranean countries members of the MAGHRENOV consortium.

• The second part deals with the identification of a series of challenges to be addressed and provides recommendations to stakeholders and decision makers on how to better deal with these challenges.



I. Analysis of the current situation In the southern Mediterranean countries, like in many other emerging economies, the creation of innovative businesses and the stimulation of technology transfer activities are becoming important components of their national research and innovation policies. It is well known that these new companies are privileged vectors for the diffusion of new technologies, the introduction of new forms of work organization, the modernization of the productive sector and have, in general, a positive impact on the acceleration of economic growth. In fact, the shift of R&D public policy from basic and applied research support towards the promotion of innovation was initiated in the developed economies during the 1970s and gained a strong impetus with the emergence in 1980s of the information and communication technologies. Given its characteristics, this sector has been the catalyst for the establishment of the new institutional and regulatory frameworks to promote the creation of innovative businesses. Regardless of the country socio-economic level and characteristics, the establishment of an efficient national system of innovative entrepreneurship is a complex and difficult process because it involves a large number of actors and institutions. In addition, this system must be constantly readjusted to cope with the rapid changes in technologies and markets. Moreover, it must be flexible enough to take into consideration sectorial specificities. In the last decade, the southern Mediterranean countries have achieved a significant progress at all levels of the creation process: from the ideation phase, through the incubation phase and the development phase. However, several shortcomings still characterize each of these phases, which therefore, strongly limits the overall effectiveness of the current systems of innovative businesses creation. As it was shown in the context of MAGHRENOV project, these shortcomings concern mainly the following aspects:

• The identification and selection mechanisms of good ideas are not structured ; • The incubation structures suffer from a lack of professionalism ; • Coaching and mentoring, which are very important in the incubation phase, are not

adequately insured ; • Financing of the new innovative projects is complex and difficult ; • Most of the entrepreneurs lack the required managerial skills.

In fact, these shortcomings are the usual constraints associated with the creation of innovative companies in developing economies: inadequate support structures, difficulties related to human resources, difficulties related to financing and finally market access difficulties.



Unfortunately, once created these companies are hindered by these handicaps: insufficient adequate human resources, inappropriate profile of the entrepreneur, frequent immaturity of the proof of concept and business model at the launch of the company and insufficient development funds. Given these constraints, the number of innovative companies in the southern Mediterranean countries and more particularly in the RE and EE domain is still very low. For example, the incubator of the Borj Cedria Ecopark in Tunisia1 has hosted since its creation in 2003 only three projects in the field of RE over a total of sixty projects. Strong improvements of this support system to innovative businesses creation in Morocco and Tunisia are therefore urgently needed. One of the main objectives of MAGHRENOV project was, indeed, to make a concrete contribution to the up-grading of these systems and several activities were performed in order to achieve this objective. The first activity was the launch of a call for proposals for the creation of innovative businesses. This call for Innovation Projects was co-financed by two partners of the project: IRESEN and KIC InnoEnergy SE and aimed to provide support to Euro-Moroccan consortia who wish to develop innovative products or services in the field of Renewable Energy and Energy Efficiency, as defined in the MAGHRENOV specific Roadmaps. (Deliverable D3.1) Four projects have been submitted. The first project addresses the use of solar PV to empower a 48 V DC micro grid with a development of components and interfaces. The second project aims to finalize the development as well as the commercialization of a solar driven vehicle which can be used in poor rural areas and could also meet the daily travel needs of large populations in developing countries. The third project proposes the dish Stirling technology for power production in the utility multi-megawatt scale level. The fourth project proposes the development of a Fresnel solar concentrator technology with hot air production to be used in drying applications. As it can be seen from the above short description, these projects address smart grid, PV driven application, concentrated solar power and solar thermal applications. They are all valuable and marketable contributions and present different technology readiness levels. The participating bodies to the call from both sides of the Mediterranean are specialized SMEs, University Laboratories, Research and Technical centres, and support bodies for Research & Development and valorisation. These kind of organizations which are widely recognized as being the main scientific and technical actors in RE development and implementation have been settled in the southern part of the Mediterranean and can give a local content in terms of products and services to the RE share.

1 http://www.ecopark.tn/index.php?p=20&t=pepiniere


http://www.ecopark.tn/index.php?p=20&t=pepiniere


It is clear, that the participation in this kind of call is a real opportunity for local bodies, and the partnership between joint companies from both sides of the Mediterranean is of mutual benefit and can reinforce local industries. The second activity achieved by MAGHRENOV project is the definition of an adapted service package for entrepreneurs, based on tested services delivered by KIC InnoEnergy through its service offering and the characteristics and resources of Moroccan and Tunisian entrepreneurship ecosystem. (Deliverable 5.1) The third activity is the creation of new professional networks through the successful organization of 3 seminars in Morocco and Tunisia. Based on the outputs of these workshops a training module catalogue was established to support business creation along with a directory of experts in this field. (Deliverable 5.2) It is evident from these findings and activities that despite the shortcomings that characterize the current situation of innovative business creation in Morocco and Tunisia, there are many opportunities and a great potential for the emergence and development of a strong Euro-Mediterranean partnership in this domain.



II. Recommendations for innovative business stimulation

Recommendation n°1.

Promoting the spin-offs and innovative companies' creation in southern Mediterranean countries and valorizing of the research results available in the Euro-Med region.

Reasons / Main challenges: The ecosystem of innovative business creation in the southern Mediterranean countries is relatively young but gaining consistency. Various instruments and programs that encourage entrepreneurship and help entrepreneurs to better study the feasibility and the realization of their ideas have been set up over the last decade. However, several shortcomings hinder the overall performance of this support system to the creation of spin-offs and start-ups:

• The identification and selection mechanisms of good ideas are not sufficiently structured. • The incubation and business creation institutions suffer from a lack of professionalism. • Coaching and mentoring are not properly insured. • Innovation funding instruments and incentives mechanisms are not very efficient. The seed

funds and venture capital funds have to a large extent a risk aversion. In the RE and EE sector, the needs in terms of seed capital are very substantial especially in some activities of the value chain. Capital recovery times are also longer than in other sectors. The result is a discouragement of private investment and a substantial increase in public investment needs.

• Incentives for committed researchers in applied research projects are either inadequate or complicated to obtain. The same problem exists concerning mobility of these researchers in the newly created companies.

• Most entrepreneurs in the region do not have the required experience to manage a new business.

• Finally, the available research results commercially exploitable in the form of new processes or products or prone for development activities, are not sufficient to support the creation of a critical mass of innovative companies.

Implementation:

• Encourage the valorization of research results through the establishment of a program supporting the creation of spin-offs and innovative companies in the RE and EE fields. The experience gained through the MAGHRENOV project’s joint call should be capitalized.



• A high priority should be given to the appropriation by the southern Mediterranean countries’ institutions of the suitable methodologies developed by the EU instruments and projects. The expertise in innovative business stimulation of KIC InnoEnergy could be an excellent example. This program should encourage the joint involvement of specialized research centers, national energy management agencies, support facilities to business creation and funding institutions in the southern Mediterranean countries. As we stressed before, in the southern Mediterranean countries, institutions exist, but their efforts, resources and instruments are rarely devoted for performing joint actions in favor of the entrepreneur. The proposed program, to be jointly funded by the EU and the southern Mediterranean countries, should provide entrepreneurs from the Euro-Med region -interested in creating new businesses in the RE and EE fields a favorable environment for the maturation of their project ideas, the creation of their companies and the needed post-creation support to ensure the survival of the spin-off and the newly created start-ups.

• Encourage the European Institute of Innovation & Technology (EIT) to adopt a new policy for localization in harmony with the new orientations of the neighborhood policy of the European Commission1 through the commitment in projects like the co-creation of suitable institutions (either public or private) in the southern Mediterranean countries. As an example, we can mention a co-creation of a KIC InnoEnergy acting at the level of the Euro-Med region. The recent association of Tunisia to the H2020 framework program could be exploited to achieve this goal.

• Encourage the important players in Morocco and Tunisia namely the IRESEN in Morocco and the ANME in Tunisia, to fund or to mobilize the required funding for project calls to create innovative companies in the fields of ER and EE. Partnerships with local and international financial institutions to stimulate business creation could also be encouraged to this end. As part of the implementation of the new neighborhood policy orientations2, a credit line could be made available to these institutions or their specialized local financial partners to be used for the creation of new businesses (support for the acquisition of equipment for example) in the same mode of intervention of venture capital funds. The recovered capital could be reinvested in the creation of other companies according to the same model.

1 http://eeas.europa.eu/enp/documents/2015/151118_joint-communication_review-of-the-enp_en.pdf 2 Idem.


http://eeas.europa.eu/enp/documents/2015/151118_joint-communication_review-of-the-enp_en.pdf



The following example from another field deserves to be presented here: In the context of boosting entrepreneurship in the forest areas in Tunisia, the acquisition of equipment required for starting a business specialized in the extraction of essential oils was supported by a loan obtained from a project financed by the World Bank. The agreement signed with the entrepreneurs stated that they are obliged to repay, the interest free credit to the local agency that is responsible for the development of forest areas which acts as a full partner in the company (like a risk capital fund) until the complete reimbursement of the credit. The sum recovered by the local body responsible for the development of forest areas enables it thereafter to fund other projects according to the same principle.



Recommendation n°2.

Strengthening innovative capacities of local industry of RE and EE and encouraging the emergence of strong Euro-Med clusters.

Reasons / Main challenges: In the southern Mediterranean countries, the ability of local industry to innovate and to contribute to the development of new technologies requires to get strengthened. Apart from very few exceptions, local production in the southern Mediterranean countries is not only limited but also situated in low technology segments in the value chain. Most of the industries in the southern Mediterranean countries are composed of very small businesses and little innovative SMEs. They have not necessarily reached a stage of development that requires a strong use of R&D. They are therefore more oriented towards the less capital intensive and easy activities such as making small equipment, installation, retail trade and maintenance. Very few are those which engage in activities requiring a substantial investment. Market risk and therefore the risk for investors remain high in the southern Mediterranean countries. This slows the development of the sector. New RE &EE Clusters have been recently created in Morocco and Tunisia and have been involved in the Maghrenov project activities. In Tunisia, the Renewable Energy Cluster was established in 2014 by 14 companies, the CRTEn and the “Société de Gestion” of the Borj Cedria Technology Park. This cluster aims to contribute to the development of RE sector through collaborative operational actions and the definition of a strategy for the sector through the mobilization of public or private companies and institutions. In Morocco, the creation of the Solar Cluster was initiated in 2014 in partnership with professional associations and academic institutions. It aims to reinforce the actions engaged in the framework of the Moroccan solar plan and to create synergies between the industry players in order to promote the emergence of a competitive industrial solar industry in Morocco. Generally, existing clusters in the southern Mediterranean countries do not promote enough networking and the sharing of risk across the region and even on a national level. They are not developed to the point of encouraging the pooling of capitals to fund activities of common interest to the sector.



Implementation:

• Promote the emergence of a Euro-Med meta-cluster in RE & EE working for the co-

production, co-development and co-ownership. This could be realized through the combination of existing clusters in the region (twinning projects, organization of joint actions,...) and the involvement of institutions such as ANIMA network1, French competitiveness clusters (pôles de compétitivité)2, KIC InnoEnergy,...

• A call for projects dedicated to strengthening existing clusters in the countries belonging to 5+5 Dialogue countries might also be considered to : o Support collaborative R&D projects targeting high-growth potential markets: aid package

for the selected projects presented by consortia of clusters from the region, monitoring and support to the projects, support for the commercialization of results.

o Encourage technology transfer and creation of economic value from the results of public research in the Euro-Med region.

o Encourage public-private partnerships in the areas of RE and EE involving at least one European cluster and a cluster partner in the Southern Mediterranean countries.

• Establish a mentoring program for young innovative SMEs in the southern Mediterranean

countries by large companies from EU or local ones. This action will aim to promote the transfer of experience, skills, but also technology from large companies to selected small and innovative companies through a sponsorship system. Such a program can help develop a young innovative SMEs body in the southern Mediterranean countries around European or local contracting parties.

• Establish a program for encouraging European companies set in the southern Mediterranean countries to operate R&D extensions of their activities. Supporting the implementation of R&D centers or partnership projects between companies and specialized research centers of the southern Mediterranean countries can contribute to developing local added value.

1 http://www.animaweb.org/fr 2 http://competitivite.gouv.fr/identifier-un-pole/annuaire-des-poles-20.html


http://www.animaweb.org/fr

http://competitivite.gouv.fr/identifier-un-pole/annuaire-des-poles-20.html


Reasons / Main challenges: In the southern Mediterranean countries, the required actions for boosting demand on the RE market are numerous. Without demand boosting, the effectiveness of any actions for stimulating the supply will remain limited. The stimulation of business and innovation in the RE sector should not be considered under the restrictive terms of the offer side. The already undertaken initiatives in the southern Mediterranean countries (national plans, subsidies...) are important but their actual extent and impact are below what is required for the RE sector expansion. In the southern Mediterranean countries, the RE sector is far from being a driver for sustainable and inclusive economic growth. Until now, the major national projects designed to promote the sector contribute little to alleviating the deep origins of complex problems that are faced by the southern Mediterranean countries at the socioeconomic level. Implementation:

• Take advantage of the large scale projects planned in Morocco’ and Tunisia’ Solar plans to boost Euro-Med cooperation in this field. Some of these projects could be implemented in the framework of a support program in the field of RE in the southern Mediterranean countries. Like the upgrading or modernization of industry programs, the program dedicated to the RE sector could be envisaged with a co-financing (public / private and EU / SMCs) and in the form of a competitive fund. These projects will lead to the establishment of partnerships between large companies and SMEs in both parts of the Euro-Med region.

• These projects can generate an interesting increase of demand for the local market but also for European companies while helping to face the challenges of better meeting the needs of local people. At the macro level, there is a way through such projects to strengthen RE sector's ability to drive growth of the southern Mediterranean countries by exports with higher added value (more technology intensive components to Europe…) but also for job creation, income improvement, etc.

Recommendation n°3. Promoting major projects and encouraging the increase of demand in the southern Mediterranean countries.



Recommendation n°4. Initiate a dialogue between the MPCs and the EU to boost or re-launch mega projects in the field of RE across the Euro-Med region.

Reasons / Main challenges: At the level of the Euro-Med region, mega regional projects, like the Mediterranean Solar Plan or Desertec or Med Grid, have been designed but their effective realization was hampered by many obstacles. Mega projects can have real impacts on the development of RE sector and the development of collective R&D capacity across the Euro-Med region. These projects can generate an interesting application for the local market but also for European companies while helping to deal with the challenges of better meeting the needs of populations. Mega regional projects in the RE sector can now play a new strategic role. The challenges that were behind the COP211 agreements, the new orientations of the EU neighborhood policy2 and the efforts made in the region towards the emergence of an inclusive green economy favor the success of initiatives with a win-win view for both sides. The revitalization of mega regional projects in the RE sector could be considered as an opportunity for the co-construction of a new vision for the Euro-Med region Implementation:

• Initiate a dialogue between the southern Mediterranean countries and the EU to boost or re-launch mega projects in the field of RE across the Euro-Med region. Such projects could be envisaged in the long term as a means to achieve a holistic view of RE development but also the development of the green economy in the Euro-Med region. Besides building this shared vision by the southern Mediterranean countries and EU, the dialogue should focus on identifying adequate solutions to overcome the obstacles that so far have hampered the realization of mega projects in the region. Political consultation would allow more maturation of these project ideas for the benefit of the entire Euro-Med region. The consultation could also cover the financing of these projects (joint funding public/private, greater contribution of the southern Mediterranean countries and the EU because of the new challenges ...).

1 http://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf 2 http://eeas.europa.eu/enp/documents/2015/151118_joint-communication_review-of-the-enp_en.pdf


http://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf




References [1] InfoDev. 2014. Building Competitive Green Industries: The Climate and Clean Technology Opportunity for Developing Countries. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0. [2] IRENA (2015), A background paper to “Renewable Energy in Manufacturing”, March 2015. IRENA, Abu Dhabi. [3] MAGHRENOV project Deliverable 3.1; Mapping of existing RE&EE roadmaps adapted to the region. [4] MAGHRENOV project Deliverable 3.5; List of priorities to be supported jointly as well as individually by the partners or other institutions.

[5] MAGHRENOV project Deliverable 4.3; Vision paper for an ERA-NET+.

[6] MAGHRENOV project Deliverable 5.1; Tested service package for entrepreneurs.

[7] MAGHRENOV project Deliverable 5.2; Three seminars with other R2I projects MEDSPRING and BILAT in the region and institutions. [8] United Nations. Economic Commission for Africa. Subregional Office North Africa (SRO-NA) (2012). The renewable energy sector in North Africa: current situation and prospects. Rabat: UN. ECA. [9] Vergara W, Alatorre C, Alves L (2013) Rethinking our energy future a white paper on renewable energy for the 3GFLAC regional forum, Inter-American Development Bank, Climate Change and Sustainability Division Energy Division, Discussion paper no. IDB-DP-292.


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