It takes more than a few million pesos

The time is yet to come for the Philippine economy to be technology-driven. Having a limited budget on science and technology, it is definitely forbidding to commit large amounts of investments to develop a certain technology.

In September 2011, I wrote and presented a research paper with my professors at the 7th DOST-Engineering Research and Development for Technology Conference. The paper was entitled: “Using Game Theory to design a Financial Assistance Scheme justified by Innovation Cost to promote private clean energy generation.” As can be derived from the title, the paper proposes a methodology for designing a financial assistance scheme that employs game-theoretic principles and innovation cost. The financial assistance is supposed to convince private power generating companies to choose cleaner alternatives over conventional fossil-based fuels in producing electricity. I will not tackle game-theoretic principles in this article, but rather, I would like to elaborate on innovation cost and technological learning.

Technological learning is a concept used in energy systems modeling to account for capital investment cost reductions experienced by a certain technology as a consequence of increasing local capacity. Technological learning is the reason why, for example, mobile phones which were extremely rare two decades ago when I was still a child, have become cheap and almost universal. Let us further discuss this with solar photovoltaics (PV) as an example. Basically, if you spend $5 million to install a 1-MW solar PV plant today, a similar 1-MW plant may be installed in the future with lesser capital investment cost.

Would you agree that installing and maintaining a solar PV plant in the Philippines and in the US do not necessarily entail the same costs? First, all equipment and technologies necessary might have to be imported. Second, the Philippines might not have the talents needed to supervise the plant, so foreign engineers and scientists will have to be hired as consultants and plant managers. Finally, lacking the experience to operate such a facility, it can be expected that breakdowns would be more frequent, and maintenance costs would be higher.

So, what does the initiative to invest on the technology have to do with lowering its future investment and operational costs? I believe, to fully understand this concept, one must embrace that technology is also a business, and businesses are motivated by profit opportunities.

First, installing a solar PV plant creates local demand for the technology. This encourages investors to establish solar PV manufacturing plants and servicing centers in the country. Not having to import solar PVs and other equipment effectively lowers the local cost. Second, new degree programs and technical courses to train the local workforce can be developed. Without the demand, even if the programs do exist, people will be hesitant to enroll because there are no defined career paths after graduation. Third, it gives the country experience. As years go by, the local technical workforce becomes more familiar with the operation and therefore, more efficient.

An efficient and experienced workforce translates to lesser down times and lower maintenance costs. Finally, committing on a certain technology maximizes the local research talent a country has. For example, Japan has well established robotics and aerospace industries, and these are well backed up by outstanding scientific research from local universities. Similarly, in the Philippines, we are rich in outstanding scientific research but I am afraid that the utilities of these researches are yet to be exploited. Local research will be able to tackle local problems — problems emanating from scenarios which may be unique to our country. The concept of technological learning recognizes the aspects that can only be learned by doing. Continuously investing on a certain technology augments the local capacity to handle that technology. The workforce becomes more efficient, and the locals are encouraged to build around the technology. The government’s initial spending to develop the local capacity for a certain technology can actually be categorized as an investment rather than an expense.

I believe the key idea here is commitment. We cannot expect immediate returns from the investment — definitely not over night, might not even be over a decade. My fear is that the Philippines has finally given up on long term projects, and have settled for the strategy of looking for quick-fixes and one in a million technological breakthroughs.

In my opinion, we certainly must commit a long-term investment to develop at least one scientific project on a large scale. But then, the same questions bounce right back at us and the fear to invest capitalizes on them. Do we have the technical workforce needed? Do we have experience? Do we have the local capacity to service and maintain the technology? Do we have enough local scientists? We don’t, and we will never do if we do not start committing to producing them now.

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Neil Stephen A. Lopez recently received both of his Bachelor’s and Master’s degrees from De La Salle University, becoming the first graduate of the BS/MS honor’s program in mechanical engineering. He graduated magna cum laude and received the gold medal for outstanding master’s thesis. His research interests include energy systems modeling, and sustainable power generation. His master’s thesis was on the post-production processing of microalgae biomass for biofuel production. In 2009, he did a one-year internship as a research assistant at Florida State University’s Institute for Energy Systems, Economic and Sustainability. He is also the recipient of multiple awards from the Bank of the Philippine Islands (BPI) and the Department of Science and Technology (DOST). He was part of BPI’s first batch of Outstanding Expat Pinoy Children Awardees, a DOST-ERDT scholar, and an awardee of the BPI-DOST Science Awards for 2012. He may be contacted via e-mail ([email protected].).