I WENT TO AUSTRALIA TO TEST OUT TESLA’S VISION OF THE FUTURE

Elon Musk and his fans may love sports cars, but the company’s biggest contribution may be reassuringly boring

about Tesla’s cars for a minute — about the self-driving taxis or semis or whatever else Tesla CEO Elon Musk is currently hyped about on Twitter. This story is about the virtue of being boring, a perhaps underappreciated thing in our day and age. This is a story about not changing your life and how much better that can make it. That’s what Tesla is selling in terms of renewable energy: your life, but with fewer fossil fuels. Your house, powered by solar.

I wanted to know what that would be like in reality. That’s how I find myself in an Australian mansion powered by Tesla’s solar panels and Powerpack battery, driving a Model X. I can tell you firsthand that renewable energy isn’t exciting. That’s what makes it so compelling.

On the drive to the mansion, signs warn me to be careful of wildlife, complete with a portrait of what I am guessing is a wombat. A representative from Tesla picked me up at the nearest airport to Byron Bay and sat next to me while I figured out how to drive on the left. (Lane tracking helped.) When I arrive, I count the bedrooms. There are five, decorated with a minimum of personality. The master bedroom is entirely white and approximately the size of my last studio apartment. Besides the walk-in closet and king-size bed, there’s also an enormous sunken tub that looks out at what I am told is called the hinterland. Among my neighbors in the hinterland are some manner of Hemsworth brothers.

The tub is big enough that there’s a bench you can sit on. So, naturally, I run a bath and then slide into it to watch the sunset. Here I am, at the very first Tesla Destination in Australia, a home just outside Byron Bay, a surfer / hippie town that’s been overrun by rich people, possibly as a result of Hemsworthiness. The point of a Tesla Destination, as I understand it, is that it’s a place with a charger for your electric car. In my case, this is a Tesla Model X, an SUV that Musk has described as a “Fabergé egg.”

Tesla Destinations are mostly hospitality industry locations in the US; the mansion where I am staying is rented out by an Australian company for groups. It can sleep 10, according to the hospitality company, and “starts” (?) at $1,670 AUD a night. It — this has to be said — has about the same aesthetic as a porn mansion: largely empty, echoey, vaguely “high end,” and with a pervading sense that no one actually lives here.

Besides the electric charger, the mansion is also fitted with solar panels and a Tesla Powerwall, a battery for storing the energy they generate. While I live for dumb thrills like driving an expensive car I don’t own on the wrong side of the road, I am, in fact, at the mansion to experience the clean energy lifestyle Tesla is selling.

The Model X and mansion are, in some ways, emblematic of the Tesla lifestyle and approach. The dream of this lifestyle is that you can have everything you already have but without fossil fuels. You can keep on driving a car. You can live in your porn mansion entirely on renewable energy and sell any extra power you harvest to the grid. But best of all, you don’t have to think about any of it.

It takes me a while to sort out the kitchen when it’s time for dinner. Besides the “actual” kitchen, there’s also what appears to be a butler’s pantry, which is where all of the dishes are located. I turn on the stove and heat water for spaghetti.

It’s true that this is a story about Tesla energy, but it’s also true that we all use energy all the time. The mundane tasks I engage in as I settle into the mansion — the bath, cooking dinner — of course, require energy. I can watch the little jiggles of energy required on the Tesla app. All day long, the mansion has been running on solar energy, and it continues to do so right up until I plug in the Model X to charge. That battery draws so much energy that the house switches to the grid.

So I’m running on the grid energy when I wake up the next day and make breakfast. The leather couch in the main room (what the marketing materials call an “open concept living and lounge space”) is sunken in a large rectangular depression called a conversation pit. I decide I’d rather work there than at the table, so I settle in, plug in my laptop, and start working.

During my three-day stay at the mansion, Tesla will abruptly reverse course on its abrupt decision to shutter all of its stores and move all of its sales online. Actually, I wind up writing that story shortly after I arrive at the mansion before I make dinner. The company will increase the price of its cars. Musk will accuse the US Securities and Exchange Commission of making an “unconstitutional power grab” over his tweets. (I will write this story while eating toast in the conversation pit.) Despite living and working for days in what is probably the best example I have seen of a luxury environmentalist lifestyle, I find myself wondering what the catch is.

Photo: Bloomberg / Getty Images

first “master plan,” dated to 2006, involved making a luxury electric car that focused on the fun rather than the environmental prospects of an electric car: a sports car with the kind of pickup that would make gearheads like Jay Leno excited. Instead of focusing on pure do-goodery, which has a kind of limited market, the electric car would be an aspirational good. Then, after proving that it was possible to make an electric car desirable, there would be cheaper versions, and the profits from those could be used by Tesla to provide solar power.

The second master plan, out a decade later, shifted Tesla’s focus from cars to energy. “The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good,” Musk wrote in the document. Published in July, it preceded Tesla’s August 1st, 2016, announcement that the company was acquiring SolarCity, which was then the largest maker of solar panels in the US. (SolarCity was founded by Lyndon and Peter Rive, Musk’s cousins. Musk was chairman of both companies at the time and was SolarCity’s largest shareholder.) By bringing the two companies together, Musk wrote, Tesla could “create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world.” The acquisition was completed that November.

In 2017, Tesla began taking preorders for its solar roof. The pitch was pretty simple: tile-sized solar panels that could be used as a home’s, well, roof. The tiles look the same as normal roof tiles, so it’s not even visually obvious that there’s anything harvesting energy up there. Using Tesla’s calculator, if my landlord were to install the solar tiles on 40 percent of my apartment building’s roof, it would cost $157,100, about five times more than conventional roofing. But, as the energy calculator points out, the high upfront cost can be amortized out — plus, there’s a $27,000 tax credit to help sweeten the deal.

Though the mansion had solar panels rather than the tiles, it seems like a pretty good representation of what Tesla’s second master plan hoped to achieve. Living in Tesla’s imagined future, most of the activities of my life weren’t especially changed by switching the source from which the house drew energy. The only thing that might have qualified as a difference was me checking the Tesla app to see what was going on with my energy usage.

It was luxurious, sure. I was also aware of how much shabbier my own lifestyle was by comparison. I was staying in a mansion and driving a fancy car in a popular tourist town. If I weren’t so badly dressed, I would have looked impressive. Whenever I drove into Byron Bay, people asked about the Model X — not about the car’s electric engine, but mostly about the falcon wing doors. I spent most of those days with a low-level growl of anxiety that I would break something worth more than I am.

It’s undeniably seductive to be promised free energy without sacrificing any amenities. In my life, I have made some of those sacrifices because I like the environment and also because I’m cheap. Unlike most Americans, I don’t own a car; I bike or I take public transit. It takes me longer to get where I’m going, and sometimes I arrive sweaty. But I’m healthy, I don’t have any disabilities, and I don’t haul around any kids. Plus, I live in an area where public transit is possible. There are a lot of reasons Americans own cars, but the biggest one is necessity. The next biggest? Convenience. An electric car offers everything a gas car does but without the pollution.

I am often surprised by the discussion among environmental activists of what people should do. It only rarely takes into account what people might want or what might limit their choices. Here, too, Tesla has suggested that very little needs to change: you can live in your home without pulling energy from the grid or by pulling minimal energy. Engaging in an environmentally friendly lifestyle doesn’t require you, the consumer, to give up comfort or change your values, Tesla’s home energy products promise. You don’t even need to lobby your local government for better transit options.

“We’re moving towards this world of energy abundance… for really, really low cost,” says Drew Baglino, the vice president of technology at Tesla. “These technologies are ready … The only thing stopping it from happening is us — the collective us.”

Solar and wind energy are basically free once you set up the infrastructure to take advantage of them. Over the last two decades, the cost of that infrastructure has come down. And batteries are a crucial part of that because you can’t get solar energy on a cloudy day or wind energy on a still one. A battery, however, allows you to store energy from a sunny day to run your home on a cloudy one. After all, why should your lifestyle be altered by something as annoying as the weather? Why should your lifestyle change at all?

Heidi and John Lovakovic with their dog Cocco have a Tesla battery and solar panels at their home in Walkley Heights, Adelaide, South Australia.
Photo by Kelly Barnes for The Verge

— or at least cheap — energy isn’t likely to make a difference to the people who stay in the mansion. They aren’t paying the electric bills. But for Australians like Heidi Lovakovic, 57, who got fitted out with 17 solar panels and a Powerwall in May 2018, it’s made a massive dent in her energy bill. She gets billed quarterly, and before the installation, her power bill was $800 AUD in the summer.

I meet her in a suburb outside of Adelaide. The solar panels on her house’s roof are immediately visible from the street. Unlike the mansion, her one-story cottage feels lived in from the moment I ring the bell and a small dog begins to bark. Lovakovic shows me in and offers me tea from her neat and unfussy kitchen. The general decor reminds me of the American Midwest — more specifically, Ohio, and even more specifically, my grandmother’s house, right down to the lace table runner on the dining room table. The mansion is a kind of fancy hotel; this is a home.

The installation of the solar panels and the Powerwall eliminated her energy bill, she tells me. And because she sells electricity back to the grid, she sometimes gets a credit on her statements from the electric company. Obligingly, she gets out her bills to show me.

Lovakovic had previously tried to put solar panels on her home, but she wasn’t able to get a line of credit. So when the South Australian government announced in early 2018 that 1,100 people who lived in South Australia Housing Trust properties — as she does — could apply to have Tesla’s solar panels and Powerwall installed in their homes, she signed up. The network was up and running in July. “It’s wonderful,” she says. “We haven’t had a bill.”

Lovakovic’s house is part of a larger-scale attempt to move to sustainable energy: a virtual power plant. Basically, a bunch of Tesla Powerwalls in a bunch of people’s houses in the suburbs of Adelaide are linked together. They gather energy from the solar panels on the residences’ roofs, and they can supply the neighborhood during a blackout. The first phase of 100 homes started in February 2018. When I visit, Tesla is scaling up to the second phase of 1,000 homes.

Okay, sure. But why South Australia? The short answer is that the grid sucks there, and the slightly longer answer is that there’s less energy regulation in Australia than there is in the US. (Though it should be said that there’s a similar project in Vermont with Green Mountain Power.) The even longer answer is that South Australia has had trouble maintaining reliable power for years, and Australia deliberately made an effort to move to renewable energy, says Sam Crafter, 45, the executive director of energy implementation for the South Australian government.

“We’ve ended up being the demonstration place for energy,” he says.

Sherallee Andrews has a Tesla Battery and solar panels at her home in Golden Grove, Adelaide, South Australia.
Photo by Kelly Barnes for The Verge

In 2002, South Australia had very little renewable energy. Concerns about climate change prompted the Australian government to set up incentives for renewable energy in 2006. The country has set an ambitious goal of getting to 75 percent renewable energy in 2025 or 2030. South Australia, in particular, was an ideal place to integrate renewables into the infrastructure: in 2016 and 2017, huge weather events caused a statewide blackout. “It brought into focus how risky our situation is as a state,” Crafter says.

So the state put out a call for renewable technology that might help alleviate the situation, and Tesla put in a bid for its linked system, called a virtual power plant or VPP, and suggested using Australia’s housing trust to deploy it. That way, the government owns the batteries and solar panels as well as the homes where they’re installed. Those customers, who are mostly low-income, are most likely to benefit from cheaper power bills directly, but any excess energy they draw can shore up their neighbors’ homes as well.

Lower bills were a theme among the people I spoke to who’d had Powerwalls installed in the first portion of the plan. Sherallee Andrews, 58, told me that her bills ranged from $300 to $400 AUD quarterly before her 17 panels and Powerwall were installed in April 2018. Now, she says, the bills average around $12. Another customer, Victoria Townsend, 45, had 20 panels and a Powerwall installed in April 2018. “We noticed the benefits quickly over the summer,” she says. Her bills used to be $340 to $450 AUD quarterly, and now her statements appear as credits. The energy company owes her about $130 AUD, she says.

Victoria Townsend has a Tesla battery and solar panels at their home in Dover Gardens, Adelaide, South Australia.
Photo by Kelly Barnes for The Verge

This is part of the selling point for VPPs. But there’s another one to keep in mind, says Gerbrand Ceder, a professor of materials science and engineering at the University of California, Berkeley. Unlike the current electric grid, VPPs aren’t centralized. That means they could potentially make the grid more secure.

“The Powerwall is like power security,” Ceder says. (He owns one.) “As long as your power comes from one centralized place, there are major security issues in stabilizing the grid. I see the benefit of highly distributed power as a security issue.” A distributed grid has many vulnerabilities but no one large vulnerability, Ceder points out. That makes events like the US Northeast blackout in 2003, when an estimated 50 million people were left without power because of some rogue tree branches, less likely.

When I ask Andrews if the battery made a difference for blackouts, she laughs. “With the battery, we hardly notice blackouts.” Townsend tells me she hasn’t really noticed blackouts, either. “The light flashes once.” But you don’t realize it’s a blackout unless you check the app, Townsend says, because the lights stay on. I am reminded, again, that the strongest selling point for this technology is exactly how little it will change for the person who installs it.

Photo: Bloomberg / Getty Images

still mostly sells and leases cars; revenue from automotive sales and rentals in the first quarter this year totaled $3.72 billion. Solar energy generation and storage — solar panels plus Powerwalls and Powerpacks — was $324 million, a fraction of what the company makes from its cars. It’s also a drop from the first quarter last year when Tesla had energy sales of $410 million. (Tesla declined to say how much of that revenue was from energy storage specifically.)

In fact, Tesla’s market share in solar energy has been shrinking. When Tesla first bought SolarCity, it was the biggest player in residential solar energy. Last year, Tesla slid to second place, behind Sunrun. In June 2018, the company stopped selling its solar panels at Home Depot. That tanked sales: energy generation and storage revenue sank in the fourth quarter last year to $371.5 million, a 7 percent decline. (A former Tesla employee told Reuters that Tesla “didn’t appreciate the significance” of the Home Depot deal.) Then, in February, the company announced that all solar and storage would be sold online.

In April, Tesla announced that it was cutting prices on its solar panels in response to its drop in market share. Though the price on Powerwalls hasn’t dropped, Tesla says that it’s simplified the process of putting a Powerwall in and lowered installation pricing so more Powerwalls are being put in homes daily.

Tesla isn’t the biggest player in consumer energy storage, either; that’s likely Sonnen, which was bought in February by Shell. (Yes, the oil company.) Sonnen was founded in 2010, and has installed 40,000 battery packs worldwide to date, according to a Financial Times report. Sonnen received permission to build its own version of a VPP in Germany. Vivint Solar, LG, Eos, Sunverge, and Nissan all dabble in the space, too. More companies have jumped in as the cost of lithium-ion batteries has come down.

Part of what differentiates battery companies is the supply chain. Right now, Tesla is predominantly using Panasonic’s supply chain, says Craig Irwin, an analyst for Roth Capital Partners. While Irwin doesn’t see any problems with battery production in the next five to 10 years — “not on lithium, not on cobalt, not on separators, or electrolytes, I don’t see it” — Panasonic will always get the best price on things coming from its own supply chain. For Tesla to have an advantage on materials, the company would need to create its own supply chain, something Irwin doesn’t see happening for at least the next 10 years.

On the residential storage side, Tesla isn’t just using Panasonic cells; it’s using Samsungand other suppliers. That’s because not every supplier makes every kind of cell. Tesla’s battery issues may make expansion tough and expensive, even though Tesla recently bought Maxwell Technologies, a battery company known for its dry electrode technology. If the new technology works out, that means a massive reduction in how much it costs to make each battery cell because no solvent is required, meaning it doesn’t need to be recovered and recycled. Maxwell also has all-ceramic separators, which might make batteries last longer. (Tesla declined to comment on the Maxwell acquisition’s purpose.) The battery squeeze has gotten so intense that Musk, in a June 2019 shareholder meeting, discussed the possibility of Tesla getting into mining.

Solar panels set up by Tesla Industries are seen at a hospital in Vieques, Puerto Rico, on November 27th, 2017.
Photo: AFP / Getty Images

There is also the cautionary example of Vieques, Puerto Rico. In September 2017, Hurricane Maria — the worst natural disaster ever to hit the island — knocked out the lights and power for all of Puerto Rico where 3.3 million Americans live. Tesla employees landed on the island a week later, offering a proposal to create “microgrids” to produce and supply power separately from the island’s main grid. It wasn’t the first time Tesla had done this: on Ta‘ū an island in American Samoa, all 600 residents were now using a solar battery power system. Tesla had also built a solar and battery farm on Kauai, a Hawaiian island. More recently, Tesla also helps manage energy in Samoa where the company helps balance the load of energy on the island using an 8MW Powerpack. (The software also controls a diesel generator, just in case.)

While Tesla did successfully get electricity up and running at one project, larger changes didn’t really happen. “At one water treatment facility, the battery sat dormant and, during HuffPost’s visit to the site in late February, the field of solar panels was overgrown with weeds and brush,” Alexander Kauffman wrote for HuffPost.

There were also regulatory hurdles in Puerto Rico that Tesla didn’t face in Australia. Australia generally has more lax regulation around power than the US does. That’s one reason why Tesla has projects there. Regulatory changes have happened in Puerto Rico that should make it easier for renewables, including rules that make it easier for microgrids to get started.

Australia may represent the high water mark of Tesla’s power ambitions so far, with a favorable regulatory framework, a government investment in renewable energy, and plenty of money to spend on upkeep. It is the second-hottest renewable energy market for commercial energy products in the world, says Irwin. The hottest market in the world right now, Irwin says, is Germany.

But fundamentally, according to Irwin, the biggest thing pushing battery technology right now isn’t energy storage systems for homes or utilities. It’s electric cars. “The success of residential energy storage systems and utility energy storage systems will be derivative of the EV pull,” he says. That makes the energy storage products a nice business adjacency for Tesla — the company certainly has plenty of engineering expertise — but it also suggests that it’s unlikely to be the main driver for Tesla in the next several years, or ever.

Because cars are so important to Tesla, they are likely to take priority. Last year, there was a shortage of cells as Tesla began ramping up its Model 3 production. That slowed the production of energy products. The company pointed out in its fourth quarter letter to shareholders last year that new energy production lines have been built out at Gigafactory 1 where Tesla manufactures its energy products, including the Powerwall and Powerpack.

Tesla is about to launch another new car, the Model Y. In April, Musk tweeted that Panasonic’s pace of battery production was constraining the production of the Model 3. “Batteries will run out if Tesla starts to sell the Model Y and expands its business next year,” Panasonic CEO Kazuhiro Tsuga said in May, according to Bloomberg News. “What will we do then?”

Night at the Hornsdale Power Reserve. The 100MW / 129MWh lithium-ion battery is the largest in the world.
Image: Tesla

I write this in California, we are entering fire season, which, theoretically, starts in June and ends in December but is beginning to feel permanent. My local electric company, PG&E, has announced that there may be days-long outages for some of its customers this summer. They have also been responsible for more than 1,500 California fires since 2014. That means the energy company is likely to deactivate more power lines this summer, out of caution, UC Berkeley’s Ceder says. So hot, dry, windy weather is power outage weather all summer long. And the outages have already started: already, Yuba and Butte counties had their power switched off.

“I’m worried,” California Gov. Gavin Newsom said. “We’re all worried about it for the elderly. We’re worried about it because we could see people’s power shut off not for a day or two but potentially a week.” The city of Calistoga alone may lose power 15 times this season, the Bloomberg report said.

Most people aren’t prepared for this, and that includes me. About three weeks ago, my mother called to ask if I had bought a solar generator and a battery, just in case. I still haven’t done it. Most Californians haven’t, though the situation has boosted interest in home energy systems. According to BloombergNEF, almost 10,000 home battery systems were in place last year, up from just 400 in 2016. But the cost was steep, averaging $16,400 once incentives were factored in.

That cost helps explain why some people believe the Powerwall and consumer solar panels aren’t the real game for Tesla energy. “I never would have imagined that: someone showing off a battery as a status symbol,” says Sam Jaffe, an analyst with Cairn Energy Research Advisors. “It’s neat, it’s modern, it looks good, you look cool, I guess. It still puzzles me that a battery can be sexy.” That might make it more like a “halo” car, a representation for the brand that isn’t really affordable or practical for the vast majority of consumers.

The product Jaffe flags as being most significant to Tesla’s energy business is the Powerpack. “The Powerpack is a very competitive and well-engineered product that’s always going to be one of the primary choices to be used in a utility-scaled system,” Jaffe says. He’d also guess that it’s probably a larger proportion of the business than the Powerwall.

The basic issue is economic: it costs more to make a lot of little things than a few big things. And Tesla’s industrial-sized Powerpack battery makes more sense for businesses and utilities than a Powerwall or VPP might. There are places where VPPs consisting of Powerwalls are useful — near the edges of the grid, for instance, or on an unstable grid where there’s enough wealth that people can afford it. But even with that taken into account, “it’s really hard to make the economics on that work,” Jaffe says. “You’d need to have such a dramatic drop in battery pricing for that to matter.”

That means large-scale utility systems are going to dwarf whatever happens in our own homes, pretty much always. And so Tesla has installed 42 Powerpacks at an Osaka station for the Kintetsu Railway as a backup in case of emergency. But it’s pretty small as backups go, with just enough juice to get a stranded train into the station. Tesla batteries also power mini-grids in Eritrea.

Hornsdale Power Reserve by day. Hornsdale exists to lower energy prices while increasing the stability of the grid.
Image: Tesla

But an even larger-scale Powerpack installation is in Australia: the Hornsdale Power Reserve, a 147-mile drive north of Adelaide. The 100MW / 129MWh lithium-ion battery, the largest in the world, stores energy generated by a nearby wind farm.

Like the VPP, Hornsdale exists to lower energy prices while increasing the stability of the grid. The battery, which cost about $90.6 million AUD, generated revenue of $13.1 million AUD in the first six months of 2018, according to The Guardian. About $2 million AUD came from the South Australian government’s contract with Neoen, the French company that owns the battery. The rest came from trading on the energy market or from sales on stored electricity.

The Hornsdale battery dabbles in the “frequency or ancillary services market,” which is a fancy way of saying that the battery does stuff to make sure there’s enough energy to meet demand. In the first four months of its operation, the Hornsdale battery dropped prices on the market by 90 percent, according to a study presented by McKinsey in 2018.

Again, here, the goal is to allow South Australian residents to essentially live their ordinary lives, without any special awareness of the renewable energy that’s making the market cheaper and more stable. A successful execution of the Hornsdale project is one that residents hardly think of. They just notice their energy bills have dropped.

One big hope for this kind of battery is that it can be used to replace power plants that are at the end of their lifespan. Last year, Tesla agreed to supply PG&E with a new Powerpack project that would be even larger than the one at Hornsdale. The project was approved by the California Public Utilities Commission, but there’s been a hitch: PG&E’s impending bankruptcy.

The utility company was found to be responsible for the Camp fire, a wildfire that burned a record 153,336 acres. PG&E may have to pay as much as $30 billion as a result of liability for fires in 2017 and 2018, according to Bloomberg. (That excludes fines or other punitive payments.) The specter of bankruptcy may scare the planned battery storage unit out of existence, but it hasn’t yet. PG&E spokesman Paul Doherty told me that the company “continues to move forward with this project.” PG&E is aiming to have the battery online by December 31st, 2020, Doherty said.

PG&E isn’t the only company struggling. In February, Tesla announced that it was closing most of its stores and laying off some sales staff to save money. I had actually just arrived at the mansion two weeks later when Tesla reversed itself with an announcement that many of its stores would, in fact, stay open. I wrote about the announcement using the stored energy from the Powerwall battery. A more recent event suggests that Tesla, which is never especially financial stable at the best of times, was in real trouble: on May 16th, an email from Musk leaked. Though Tesla had just raised $2.7 billion this year to help the company stay afloat, Musk’s email suggested that it would only last 10 months unless severe cost-cutting measures were introduced.

Still, if Musk is to be believed, Tesla energy is where the action is this year. The Model Y unveiling event occurred in Los Angeles while I was in Adelaide interviewing Powerwall customers. I ended up watching it later in my hotel room. From the stage, I watched Musk declare, “This is the year of the solar roof and Powerwall.” Model 3 production had pulled battery resources to the car. But now that production had smoothed out, Musk said, “we’re excited about the solar roof, solar retrofit, and Powerwall.”

“Excited” struck me as the wrong word. The thing I appreciated the most about the battery-powered electricity I had seen firsthand was how boring it was. It was life as I knew it but powered almost exclusively by renewable energy without fossil fuels. The most promising thing about it was how little I’d had to change at all.

Correction: This article originally misstated Sonnen’s annual output; it has installed 40,000 battery packs worldwide to date, not annually.

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