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The Guardian - AU
The Guardian - AU
National
Gabrielle Chan

SA to spend $500m on Australia's largest battery storage and gas-fired power plant – as it happened

Jay Weatherill: energy plan is about reserving power for South Australians

What you need to know about the SA energy plan

The main points of Jay Weatherill’s energy plan:

  • Building of the largest grid-connected battery in Australia to store energy, funded by a new renewable technology fund.
  • Construction of a government-owned 250MW gas-fired power plant to provide emergency back-up power and system stability services for South Australians.
  • Introduction of new ministerial powers to direct the market to operate in the interests of South Australians.
  • Incentivisation of increased gas production to ensure more of the state’s gas is sourced and used in South Australia.
  • 10% royalty stream for landholders for access to conventional and non conventional gas reserves.
  • Creation of an energy security target to require a proportion of power used within South Australia is generated within the state.

The reaction:

  • The Australian Energy Council says at its core, it is a good plan but now the federal government needs to have a national plan. Matthew Warren also foresees a few problems over the ministerial power to intervene with the Australian Energy Market Operator.
  • Greens groups and the Greens party are disappointed at the plan’s reliance on gas but they like the battery storage and grants for renewables. Greens members Adam Bandt and Sarah Hanson Young were hoping for assistance for solar thermal in Port Augusta to transition a coal town to solar.
  • Remember the federal government spent the summer responding to the blackouts giving the SA government a bollocking on their high renewable energy target of 50%? Weatherill recommitted to that target today and said his plan would fit with the objectives of the chief scientist, Alan Finkel, who originally favoured an emissions intensity scheme (carbon price). The premier also favours an EIS.
  • Weatherill said: “If Malcolm Turnbull tomorrow recovered his memory and decided to go for an emissions intensity scheme, we would be ready to cooperate with him and our scheme would fit perfectly into those arrangements.”
  • No federal Coalition ministers have been sighted on this plan.

Thanks for your company.

See you back here next week for the parliamentary sitting.

Good afternoon.

Updated

And on the SA energy security target, South Australian energy retailers will have to get electricity from cleaner generators that produce their electricity using South Australia’s natural resources.

Retailers will be compelled to source a percentage of energy from local generators rather than from Victorian coal through the interconnector.

Updated

SA landholders to get 10% royalty stream to open access to land for gas, unconventional or not

Actually, one more thing

I have to bring you more details regarding the royalties for landholders who let gas companies on to develop the resources.

The SA government is providing $24m for a second round of funding to encourage companies to extract more gas and create more jobs.

This new round will open immediately.
The government has committed to give South Australia first dibs on the SA gas.

A new royalties return scheme will provide 10% of royalties to landowners whose property overlies a petroleum field which is brought into production.

Updated

One more point from Jay Weatherill pushing back against questions that it was the high proportion of renewables that has caused blackouts.

He was asked whether there was a problem with wind generation that has affected the SA market?

There has not been a blackout or disruption to that because of renewable energy. It is not a moot point. It is the accurate point. If you can find me the example where there has been an event that hasn’t been caused by an act of nature ripping out powerlines or doing something else, I am happy to concede the point.

I will now segue to a summary as we have not sighted a single federal minister on this SA energy plan.

Head of gas company AGL:

Updated

The Greens have also criticised Jay Weatherill for chasing gas and not solar thermal at Port Augusta.

Adam Bandt and South Australia senator Sarah Hanson-Young welcomed support for battery storage and new rules and powers to provide greater security. But they said embracing more gas power would lock in higher prices and risk creating a state-owned white elephant.

Jay Weatherill has caved into the Turnbull renewables scare campaign by shifting to gas instead of building solar thermal in Port Augusta.

We should have a government-owned solar thermal plant. Instead of a generator dependent on expensive gas, which risks being a white elephant like the South Australian and Victorian desalination plants.

Updated

In other news, Mining industry 1, National party 0.

The Australian Conservation Foundation has welcomed SA’s battery storage investment but panned the gas-fired power station plans, saying the state government would be left with stranded assets.

The ACF says the plan highlights the need for a national energy plan from the federal government, echoing the Climate Institute, echoing the Australian Energy Council.

ACF CEO Kelly O’Shanassy:

The South Australian plan is the result of a desperate situation where the Turnbull government has provided no leadership or direction. The prime minister is incapacitated by an ideological argument over renewable energy and fossil fuels,”

Battery storage, pumped hydro, solar thermal are all available to provide the sort of reliability needed. And they can be combined with much greater energy efficiency and demand management to secure a clean, flexible system.

Without a national plan, states could cause more probs, says Climate Institute

Olivia Kember, head of policy at the Climate Institute has echoed the Australian Energy Council’s comments on the need for a national approach.

The acute problems in our energy system demand rapid responses, but without a nationally consistent plan there’s a risk that state actions could cause more problems in later years.

Given the decades-long failure for national energy bodies to cope with the changes underway in the electricity market, it’s understandable that SA is stepping into the vacuum to solve its immediate problems, but it’s not the best way to run an energy system.

These triage responses to energy crises will keep occurring until we develop a nationally consistent, long-term strategy for our energy system that addresses energy security, affordability and the need to reach net zero emissions before 2050.

Matt Hatter has joined us for this special blog.

Lock the Gate, the organisation against “unsafe mining”, is not happy with the plan to pay landholders a revenue stream to access conventional and unconventional gas.

But this is also being entertained by the federal government, particularly by Nationals leader Barnaby Joyce who often says the way to solve land access issues is to speak to farmers’ wallets.

Australian Energy Council: Our kingdom for an energy plan

Lastly Matthew Warren of the AEC says, whatever the attributes of the SA plan, hopefully it will kickstart the federal government. In other words, rise off your derriere, Malcolm.

Will this kickstart the federal government’s response?

We are all hopeful. We have been asking and the chorus of voices across the economy is agreeing. We need a national plan. We need both major parties to get together and we need certainty. It is no good if we keep running [at] elections and having different plans introduced by different governments. We need this.

Updated

Energy expert: new SA energy powers may conflict with market regulator

Matthew Warren of the Australian Energy Council is also wondering how the new beefed-up ministerial powers will work with the Australian Energy Market Regulator.

Warren gets the battery. That is a tick.

He gets the gas contracts. That is a tick.

But SA probably can’t build a large power station before next summer - more likely the summer after that 2018-19. (I think Weatherill did say it would be a stretch.)

Anything they can do to provide greater firmness to the South Australian grid is welcome. We are concerned about how you would apply two different drivers of the car.

If you have the state government intervening and running the grid sometimes and the market operator running the grid. It is like two people driving the car at the same time and we don’t know how that will work.

Updated

The first project to be funded out of SA’s $150m fund will be a grid-connected battery.

SA says it will be the largest in Australia to provide 100 megawatt-hours of storage.

Not sure if this is the Billionaire’s Battery Pack or not.

Updated

Matthew Warren of the Australian Energy Council, representing 21 major electricity and natural gas businesses, says the plan gets the “core reform” right.

So it has moved away from trying to build more interconnectors to get power for New South Wales. It realised it needs [power] in South Australia first and foremost. The way they are doing it is expensive and we hope that would be overtaken by good policy and good investment, but at least they have gone down the right path.

New SA ministerial powers as a 'last-resort measure'

I mentioned early, the SA government is beefing up its powers to direct power companies in high demand times.

It includes the ability to direct generators to operate and direct the Australian Energy Market Operator to control flow on the interconnector. From the SA government release:

This will ensure every available option is activated to maintain the state’s electricity supply in an emergency situation or when market forces fail.

Drafting of new legislation will begin immediately. The minister’s power will be used as a last-resort measure if the national market does not act in South Australia’s best interests.

Updated

The SA energy policy by video.

The budget for the SA plan breaks down like this:

  • The new gas-fired power plant = $360m
  • SA Renewable Technology Fund = $150m with $75m in grants and $75m in loans
  • Plan for Accelerating Exploration (Pace) grants to incentivise new gas production = $24m.

The government is tendering 75% of its electricity needs over the next 10 years to try to encourage construction of a new privately owned generator in the state.

Weatherill says he has shortlisted three potential bidders each of which have committed to building new power generators but he does not say what sort of generation.

He says their tender will be concluded quickly.

Weatherill says they looked closely at renationalising parts of the grid but it was too expensive and slow.

He says his first priority is to get new generators to South Australia to address the energy issues.

The second objective is to get “temporary support” for SA networks which could be using hybrid generators and gas.

Updated

Jay Weatherill says the landholder incentives make sense because the state has to unlock supply. He says gas is the transition fuel to renewables.

So we are dealing with the demand side in this package and the supply side. It makes a lot of intuitive sense.

Weatherill: landowners to get incentives for access for fracking and conventional gas

Asked whether the landowner incentives are for fracking and drilling, Weatherill confirms they will be.

It is not just about fracking, but unlocking reserves. There are conventional players in the south-east locked up. There are unconventional reserves locked up. What I am trying to do with this scheme is say to people you can show the benefits.

What we have got is a framework so you can actually have land that is used for multiple purposes. It can be brought for farming or cattle-intensive or sheep-intensive. Exactly, it can be all forms of activity on that land and to that agricultural resource, a revenue stream from [gas].

Updated

Jay Weatherill: if Malcolm Turnbull recovered his memory, our plan would fit with his

The premier pulls no punches.

All I know is that there is no future in coal and the only future is a price on carbon that sends the right investment signals so we can get clean energy generation. We are not seeing that at a national level. That is why SA is taking steps at a state level to implement those measures. Every step that we are taking is still consistent with a return to national cooperation.

If Malcolm Turnbull tomorrow recovered his memory and decided to go for an emissions-intensity scheme, we would be ready to cooperate with him and our scheme would fit perfectly into those arrangements.

Weatherill: only the Oz, the coal lobby and Tony Abbott think coal is the future

Jay Weatherill takes issue that his state government should have changed their energy policies away from renewables when Tony Abbott came to office.

He was wrong, though. Nobody agrees with him … it is only the Australian newspaper, the coal lobby and basically Tony Abbott that still think that coal is the future. There is an international and national and an Australian consensus around there needing to be a price on carbon and it is pretty obvious why you need a price on carbon.

Updated

Hey Elon, hey Mike, look over here! Open for business

Jay Weatherill surfs the Tweet Tango, dropping in on Malcolm Turnbull.

We will create the jobs and opportunities that come here to SA and to meet that need but it sends a message to the nation and the world that we are open for business of this support for generally. All of the start-ups and entrepreneurs looking for a place to come, that is interested in new ideas, with a government that is prepared to back them in, they will come to SA first.

Weatherill is asked if it is a plan to shore up his political future. If I get it right for South Australia, I get it right for our government, says he.

To the extent that strong assertive government dealing with big issue sand getting them right is good politics, of course, the two things follow. It is more profound than politics.

This is a crisis which has emerged in the national electricity market. People expect the SA Government to step up and take control and we are doing that today with this plan. This now provides a foundation for us to create a clean energy future and the jobs of the future. We have been seeing a lot of international excitement about SA’s investment in renewable technology.

Weatherill thumbs nose at fed rhetoric, recommits to 50% renewable energy target

There is so much detail to this press conference so I will continue to highlight the key points and then I promise to double back and pick up more points.

Q: How does the energy security target fit in with the state-based Renewable Energy Target? Does that mean the Renewable Energy Target will be reduced?

No. We are recommitting ourselves to a 50% Renewable Energy Target. We are close to achieving that. We will wait for the latest analysis on where we are with that. The energy security target is a different arrangement which is about essentially incentivising SA power for South Australians on our side of the border. It could mean there will be more secure supply in SA which will allow us to play with our intermittent resources to create a stable system.

For a full story from Max Opray who was in the briefing, here it is:

The South Australian government has announced it will intervene in the national energy market in a $550m plan that seeks to tame the state’s turbulent power supply and prices.

Launching the plan, Premier Jay Weatherill said it is “clear the national energy market is failing the nation, as well as South Australia.

“And this is pretty extraordinary given we are a country that has an abundance of solar, wind and gas resources. For a country of that sort to be facing an energy crisis is a disgrace.”

The six point plan, entitled South Australian Power for South Australians, will be paid for out of recent state government surpluses. It encompasses:

  • Building of the largest grid-connected battery in Australia to store energy, funded by a new Renewable Technology Fund
  • Construction of a government-owned 250MW gas-fired power plant to provide emergency back-up power and system stability services for South Australians
  • Introduction of new ministerial powers to direct the market to operate in the interests of South Australians
  • Incentivisation of increased gas production to ensure more of the state’s gas is sourced and used in South Australia
  • Creation of an Energy Security Target to require a proportion of power used within South Australia is generated within the state.

Jay Weatherill says the plan is to avoid blackouts but is careful not to promise never ever.

I can’t guarantee what happens with the weather. If a tree falls on a power line it will black-out a suburb. I can’t guarantee that won’t happen.

He does not say how the state plant will be run or managed.

Where to for the state-owned gas plant?

Some more hints.

Weatherill says the gas plant will be near existing large scale users, “so they are near large transition networks so that power can be put back into the network”.

Murray Bridge is possible but he says lots of regions would be interested in “big infrastructure projects”. Parts of Adelaide, parts of regional SA.

We will be guided by the experts.

He assures South Australian taxpayers they would not have to pay higher taxes for the plan.

They won’t have to pay additional taxes because through prudent management, theTreasurer has ensured there are surpluses across the forward estimates and that will mean that the expense for purchasing this new equipment will be met out of those surpluses.

Weatherill hoping for a new gas plant by summer but it would be a stretch

Jay Weatherill says his expert advice is that electricity prices will drop as a result of more competition.

Regarding the state-owned gas-fired plant, the premier says the state struggles with ageing plant because of lack of investment due to “market failure”.

We have got market failure here. The private sector is either not investing in new generation or not investing in maintaining existing generation. That is why governments need to step up.

He says he is hoping the new gas plant would be in place if possible, before summer.

That is a stretch. We might need temporary generation in the meantime where I would be contracting with SA Power Networks for that purpose. Where? There are a range of sites that the old ETSA had scoped out for potential new gas-fired generation. We will revisit those sites to see whether they are suitable but ultimately it will be a matter for the market approach.

Weatherill is asked, isn’t it a waste of money given we will have a federal policy soon which may blow your plans out?

The premier says he is not holding his breath for the feds.

All of the policies we’re proposing will be complementary to what we understand will be recommended by the chief scientist in the Finkel review. We have no confidence that those changes, at least the fundamental ones, will occur any time soon.

Jay Weatherill: We need to protect ourselves in absence of coherent national policy

Weatherill says gas was always part of the plan.

What has become apparent to us is, in December, when the Prime Minister walked away from an emissions intensity scheme, despite it being recommended by the chief scientist, when we had the extraordinary situation with Pelican Point in February not turning on but instead choosing to black out South Australians, the closure of Hazlewood, all of those factors have led us to the conclusion that we need to step up and take control of our own future, not rely upon anyone else.

We will advocate at a national level for change but we can’t wait for that change. SA is leading. We need to protect ourselves in the meantime before there is some coherent national energy policy emerge at that Federal level.

Weatherill rejects suggestions the government could have bought the Port Augusta coal-fired power station which is closing.

Weatherill said Port Augusta did not offer SA what the state needed.

The premier is asked whether the plan merely sandbags South Australia rather than fixes the system. (Not sure a state premier is in position to do this?)

This is entirely consistent and complementary to our plans to reform the national energy market. The emissions intensity scheme is consistent with the energy security target we have laid out here. We will continue to push at a national level for the emissions intensity scheme, it is entirely consistent.

Updated

Jay Weatherill says he will replace Victorian coal with gas

This is the SA plan.

  • The nation’s largest battery storage.
  • A state-owned gas-powered plant.
  • Energy minister having local powers over energy market.
  • A new generation plant using SA’s bulk purchase of energy from the SA government to bring on more competition.
  • SA gas incentives for exploration, incentives for landowners to make sure that that gas is unlocked.
  • An energy security target – to force retailers to source certain percentage of energy in South Australia.

At its heart, replacing Victorian coal with SA gas. Making sure that SA power is reserved for South Australians. This plan is about our energy future. It is about taking charge of our future.

Updated

Jay Weatherill: national electricity market chose to blackout state

The SA premier is speaking now:

We have a national electricity market which is failing not only SA but failing the nation. This extraordinary state of affairs,where our abundant solar, wind and gas resources leads this nation into an energy crisis. If there was anymore powerful indication of a broken national electricity market, it was the events of February 8. On that occasion, we had a private national electricity market that chose to black-out South Australians rather than turn on a power station. This is a totally unacceptable state of affairs. That is why SA needs to step up and take control of its energy future. They expect me to stand up and make sure that SA is self reliant, SA relying less on the eastern States for its energy security. That is what SA’s plan for energy is all about.

ABC report: SA to build battery storage and government owned gas fired power plant

Early reports in the first minutes after the briefing.

As part of a $500m package:

  • Building battery storage,
  • A new SA government-owned gas-fired power plant,
  • New significant ministerial powers.

Ross Garnaut: In the world of Trump, nothing is real until you tweet

The other energy story that continues to grab attention is the Billionaire Tweet Tango, between Tesla co-founder Elon Musk, Atlassian co-founder Mike Cannon-Brookes and Malcolm Turnbull to find battery storage solutions for South Australia.

The SA government’s policy will most certainly reference storage solutions, given the problem is not producing enough energy but storing it for high-demand times.

The Tweet Tango has put a few local noses out of joint, namely Ross Garnaut, Zen Energy chair, noted economist, Hawke adviser and author of the original climate change report.

Garnaut remarked on the way policy development is done these days to my colleague Melissa Davey.

Malcolm Turnbull should encourage Australia’s battery energy storage industry now he has “taken interest in the tweets of an American billionaire”, Zen Energy chairman Ross Garnaut says.

Garnaut was referring to Elon Musk, the billionaire co-founder of electric car giant Tesla, who tweeted that Tesla could solve the power shortage issue causing price spikes and blackouts in South Australia within 100 days by installing 100-300 megawatt hours of battery storage.

Turnbull subsequently tweeted that he had phoned Musk and enjoyed a “great, in-depth” conversation.

But Australian companies had been working on large battery projects for years, Garnaut said, including one by Zen Energy in the upper gulf of South Australia which it had discussed with the market.

The core of the project would be to supply baseload renewable power to large energy users, initially in South Australia and then more broadly, Garnaut said.

“In this Trump era, we have a world where nothing is real until an American billionaire tweets about it,” Garnaut said.

“What we’re working on is having it ready for summer, the time of greatest stress on the grid and that’s when you really need to bring all your grid to stability.

“Zen Energy has funded it all so far, and there has been a lot of technical work and economic modelling done to see what is required in the market. We have a lot of close relations with energy providers and communities as part of the development work. When it comes to investment in the large equipment, we have the support of external investors.”

Updated

The Financial Review reports SA could use long-term power contracts:

The measures to tackle SA’s deterioration in energy supply security sharpen attention on the large volumes of gas being sucked north from South Australia and Victoria by the three Queensland LNG export projects built for a combined cost of $80bn that are still ramping up to full production.

The South Australian government is also set to use a new long-term power contract for 75% of its own agencies’ electricity needs as a driver of more competition in electricity supply in the state, and is also likely to bring in more incentives to accelerate the extraction of gas out of the ground by companies.

Updated

Bill Shorten: an electricity market should work for customers, not large private companies

Bill Shorten also commented on the concentration of big players in the energy markets and its effect on competition.

We need to make sure that the market for electricity prices is working as it should. Where you have too much concentration or in other words too few energy suppliers, too little competition in terms of the transmission businesses, then what we see is the private providers taking a larger share of profit and as a result industry and consumers paying more. So it is important that if we are to have a market for electricity generation in Australia, that it is working in the interests of the customers and not the large private companies who have a relatively high share of market control, which forces up prices.

Updated

AAP reports:

The lights went out at Adele’s Adelaide concert – but it wasn’t due to the state’s energy woes.

The UK star made fun of what she called a technical difficulty when her stage was plunged into darkness.

“So, we are having a technical difficulty. I’m not quite sure what it is,” she told concert goers according to footage released online.

It’s believed power was cut to the rotating stage at Adelaide Oval after a cord was accidentally unplugged.

But that didn’t stop the audience from having a few jokes at South Australia’s expense.

“What a welcome to her from the blackout state of Australia,” one person tweeted on Monday night.

Updated

Bill Shorten previews the SA energy plan, saying it will make sure “there is proper supplies of gas”.

I think Mr Turnbull needs to work with the South Australian government rather than attack them because Australian industry, Australian consumers, Australian gas suppliers need national certainty. The Grattan Insitute has said that the lack of national policy certainty in energy is the greatest factor driving up electricity prices at the moment. Jay Weatherill is acting.

Shorten: good to see Turnbull talking renewable energy after he mocked it with lumps of coal

Bill Shorten is speaking now and has been asked about energy policy.

What we need is a recognition that there is a national energy crisis. What we see is a combination of factors, in particular we are seeing a lot of the gas, which is domestically produced in Australia being shipped off on overseas contracts.

I think it is important that we have a proper supply of gas to Australian business and Australian households. We have waited for Mr Turnbull to do something. To be fair, this week he is talking to some of the entrepreneurs about renewable energy battery storage, I welcome that. A couple of weeks ago in parliament he was mocking renewable energy and playing with lumps of coal in parliament as if it was some sort of show and tell time at primary school.

A quick note, I forgot the 30-minute time difference. So the South Australian government will reveal details at 11.30am if you are in the eastern states or 9am WA time.

Updated

Weatherill says people believe energy is essential and think government should run it

Good morning blogans,

#Politicslive is back for a guest appearance to talk energy policy as the South Australian government rolls out its much-vaunted plans to solve that state’s looming crisis.

As it happened, last night’s storms across central and northern New South Wales gave me a taste of South Australian life at twilight. The power went down, flickered and then went out after a lightning strike to our lines that made me drop the sauce bottle.

But the nation is facing more serious problems than my lightning strike. Australia is finally coming to the pointy end of the lack of energy planning over the past decade.

This week political debate has reached peak energy mode. Consider the list of events, reports and dire predictions in the past week.

  1. On Thursday, the Australian Energy Market Operator warned that Australia is facing energy shortages if governments do not carry out national planning as exports continue to dominate the country’s gas supply. The Aemo report predicts New South Wales, Victoria and South Australia will be impacted from the summer of 2018-19 and warns that the tightening of the domestic gas market will have flow-on effects to the electricity sector unless there is an increase in gas supplies and development. Take home message: businesses will close because of the shortages.
  2. On the same day, Malcolm Turnbull said he would call all the CEOs of the major gas companies to ask what they were going to do to ensure they could provide gas to their customers. That meeting is tomorrow.
  3. And still on Thursday, the energy and environment minister Josh Frydenberg again ruled out a domestic gas reservation policy but said he was quite partial to the Queensland government’s move to reserve a specific area for domestic production. The Coalition’s argument has been that a domestic reservation policy - like the US or Indonesia or Israel - would frighten off investors.
  4. On Monday, the Australian Competition and Consumer Commission chair Rod Sims called on gas companies to support the domestic market so aforementioned businesses don’t close for the want of gas. But Sims also ruled out a gas reservation on the same grounds as the government. Scare the investors.
  5. Then the Grattan Institute warned governments may need to re-regulate electricity prices because a decade of competition had failed to deliver the promised consumer benefits. The Grattan report said what consumers had been feeling for a decade. Power prices were going up and the introduction of competition throughout the 1990s had not delivered downward pressure. Power bills have soared in the past decade, almost doubling in Sydney, Melbourne, Brisbane and Adelaide. And we don’t even have a carbon price. Where are you Tony Abbott?

While our colleague Max Opray is in the lock up in South Australia, the Adelaide Advertiser is reporting that the South Australian government has “closely considered” the option of new interconnectors between Adelaide and the eastern states and it has also been urged to buy its own power station.

The Advertiser’s Peter Jean reported last year that:

A new electricity interconnector between South Australia and the eastern states could be operational by 2021 and would cost between $500 million and $2.5 billion, power network operator ElectraNet says.

A government buying a new power station sounds like a radical solution but it should be noted that Weatherill and his energy minister Tom Koutsantonis have not ruled out any options - including a state based carbon price. Jean reports:

People believe that energy is such an essential service that they think the government should still be running it but, if they’re not, it has to be in charge,” he told The Advertiser.

That’s really what this is about, taking charge. The objective is obviously to make our power supply more reliable (and) to put downward pressure on prices, but the other element which is really critical is the jobs question.

It’s a really exciting opportunity to source, generate and control more of our power here in SA.

So stick with us as we trip the light fantastic and hopefully don’t throw out the fuse. The puns are endless really. I will take all suggestions, in the box (thread) below, on the Twits @gabriellechan and Facebook. We’re cooking with gas.

Updated

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