2 nd meeting of SAVE II project

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2 nd meeting of SAVE II project

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Title: 2 nd meeting of SAVE II project


1
2 nd meeting of SAVE II project
  • REGIONAL ACTION PLAN FOR PROMOTION OF COMBINED
    HEAT AND POWER PRODUCTION IN THE NEISSE-NISA-NYSA
    EUROREGION
  • Zittau, 2 July 2001
  • Prague, 3 July 2001

2
AGENDA OF PROJECT TEAM MEETING (1) Monday, 2nd
July
  • 900-915 Opening the meeting, agenda,
    organisational issues of the project (Miroslav
    Maly)
  • 915-930 Presentation of the outcomes of the
    Phase 2 for Germany (Dietmar Bothmer)
  • 930-945 Presentation of the outcomes of the
    Phase 2 for Poland (Andrzej Rajkiewicz)
  • 945-1000 Presentation of the outcomes of the
    Phase 3 for Czech Republic (Miroslav Maly)
  • 1000-1015 Presentation of comments to outcomes
    of the Phase 2 (Miroslav Maly)
  • 1015-1045 Discussion to Phase 2 (participants)
    and conclusions (Miroslav Maly)
  • 1045-1100 Coffee Break
  • 1100-1115 Presentation of the proposal
    methodology for the Phase 3 (Miroslav Maly)
  • 1115-1200 Discussion of the methodology for
    the Phase 3 (participants)
  • 1200-1215 Conclusions on the methodology for
    the Phase 3
  • 1215-1230 Brief discussion of other project
    phases, preparation of the next meeting,
    presentation of project outcomes - web-site,
    conferences, journals (participants)
  • 1230 Closing the meeting (Miroslav Maly)
  • 12.30-13.30 Lunch break, continuation of the
    discussion, if necessary
  • 1400-1600 Site visit to Biomass CHP in Ostritz
    (15 km from Zittau)
  • 1600 Expected end of the meeting

3
AGENDA OF PROJECT TEAM MEETING (2) Tuesday, 2nd
July
  • Only bilateral discussion of the Project Manager
    with Mr. Hans Heuij, representative of ECN, on
    the outcomes of the work of ECN for individual
    phases of the project.
  • Nevertheless everybody is welcome to participate.
  • Location SRC International CS office, Prague

4
Opening, Organisational issues of the project
  • 1. Opening and welcome
  • 2. Payment
  • Money for first installement received form
    Brussels.
  • Money were transferred to all partners except
    ECN (invoice)
  • 3. Inception report
  • Inception Report has been sent to Brussels, no
    feedback yet.
  • 4. Distribution of papers for the Phase 2
  • 5. Distribution of the Methodology for the Phase 3

5
Analysis of legal, administrative and regulatory
barriers to the expansion of CHP and district
heating, and assessment of possible impact of the
new liberalised energy markets
  • Germany
  • Poland
  • Czech Republic

6
Presentation of the papers on Phase 2
  • Brief outline of the country presentations
  • 1. Current situation in energy supply, CHP and
    district heating
  • Only very brief information to get inside the
    issue, no technical details. More detailed
    presentation will be given in Phase 3.
  • 2. Current policy, legal and institutional
    framework
  • Very brief information on the framework for CHP
    and district heating development, impact of
    energy market opening, CHP promotion policy, role
    of regional authorities etc.
  • 3. Main barriers for CHP and district heating
  • Review of major barriers, including assessment
    on functioning of the current policy, legal and
    institutional framework and changes expected.
  • 4. Conclusions and recommendations
  • Review of major findings from the Phase 2 and
    recommendations both for the changes of the
    situation if needed, and for next phases of the
    project.

7
Czech Part of the Euroregion
8
Current situation in energy supply, CHP and
district heating (1)
  • Territory 3 566 km2
  • Population 481 624
  • 5 regions Liberec, Jablonec, Semily, Ceská
    Lípa, Decín (part)
  • Largest city Liberec, 102 000 inhabitants
  • Other large cities district centres
  • Region is net energy importer of all energy
    sources (fuels, power), except heat
  • Local primary energy sources renewables
    (biomass, hydro, other limited), municipal waste,
    uranium
  • Power supply 2 regional power distribution
    companies, in some rural areas not sufficient
    capacity and low voltage
  • Gas supply 2 regional distribution companies,
    fast extension of gas network in last few years,
    all major cities connected to high-pressure gas
    network

9
Current situation in energy supply, CHP and
district heating (2)
  • District heating large DH networks in all
    district centres and some other cities (32 in
    total)
  • Large public CHP only in Liberec
  • 220 MWt and 12 MWel
  • Few old industrial medium-sized CHP plants
  • Incineration plant only in Liberec, no
    cogeneration
  • Major fuels for CHP and HOB plants
  • coal
  • natural gas
  • fuel oil

10
Small-scale district heating sources
11
Large-scale district heating sources
12
Emmission of pollutants from large-, medium and
small-scale sources (except transport)
13
Population, employment
14
Future plans in energy supply, CHP and district
heating
  • Electricity supply strengthening of some lines
  • Gas supply extension of distribution networks in
    large to medium cities, nevertheless some parts
    of the region will be without gas even in the
    future
  • Local energy sources biomass use for DH and
    local heating mostly in rural areas
  • District heating no plans for extension of
    district heating
  • Continuation of fuel switching in DH from coal
    and oil to gas and biomass
  • Some ideas for small- to medium-sized CHP but no
    final decision and no construction

15
Current policy, legal and institutional framework
  • Policy framework State Energy Policy of January
    2000
  • Legal framework
  • Energy Act of January 2001
  • Energy Management Act of January 2001
  • Clean Air Act
  • Pricing and Taxation Act, etc.
  • Institutional framework
  • Ministry of the Industry and Trade (MIT)
  • Ministry of the Environment (MoE)
  • Energy Regulatory Office (ERO)
  • Regional, district and municipal offices

16
Institutional Framework for Energy Policy
17
National Energy Policy
  • The National Energy Policy approved by the
    Government in January 2000 indicates the targets
    in the areas of energy management according to
    the needs of economic and social developments
    including environmental protection.
  • The National Energy Policy sets the short-,
    medium- and long-term targets for district
    heating and CHP extension. Nevertheless these
    targets are very general and not quantified.
  • There is evidence that the new Energy Act does
    not directly support CHP in the manner suggested
    by the Energy Policy document and other legal
    measures may be needed to do so. The Energy
    Policy document is scheduled for revision and
    updating by end 2001.

18
Regional Energy Policy
  • Energy Management Act introduces the requirement
    of development of regional energy policies for 14
    regions, one of which is the new established
    Liberec region (1st January 2001), and for
    largest cities (regional centres).
  • Energy Management Act recommends to development
    local/municipal energy policies based on regional
    policies.
  • Regional/local energy Policies should follow the
    standard methodology given in the Decree to the
    Act.
  • No policy has been developed for the Liberec
    region by now.

19
Legal Framework
  • Energy Market Regulation
  • Energy Act of January 2001
  • Environment Regulation
  • Clean Air Act
  • Regulation of prices and Taxes
  • Pricing and Taxation Act on 1992
  • Energy Efficiency Regulation
  • Energy Management Act of January 2001

20
Energy Market Regulation
  • Autorisation
  • Construction of generation units of electricity
    with the total installed capacity of 30 MW and
    more, and heat units with the total thermal
    output of 30 MW and more - MIT. Less than stated
    capacities - regional administration.
  • Licencing
  • A licence is issued by ERO for a determined
    period for generation of electricity and gas,
    transfer of electricity and gas, distribution of
    electricity and gas, storage of gas, generation
    and distribution of thermal energy. The licences
    are issued for at least 25 years.
  • Energy Regulatory Office
  • Operator of Power Market
  • Office for Protection of Economic Competition

21
Institutional Framework for Power Supply
22
Environment Regulation
  • Clean Air Act
  • According to the requirements of the Clean Air
    Act, measures to reduce emissions had been
    implemented between 1991 and 1998. Total
    investments exceeded CZK 100 billion (EUR 3
    billion). As a result, national emissions of
    major pollutants decreased.
  • Environment Impact Assessment (EIA)
  • Act on Waste Management
  • Pollutants Charge rate of emission taxes
    (CZK/Euro per ton)
  • SO2 1,000 / 30
  • NOX 800 / 24
  • Particulates/solid substances 3,000 / 90
  • CO 600 / 18
  • Hydrocarbons 2,000 / 60

23
Regulation of Prices and Taxes
  • Pricing and Taxation Act on 1992
  • reduced VAT rate for district heating
  • facilities for generation of electricity or heat
    from biomass are excempted from taxation of
    income for the period of 5 years

24
Energy Efficiency Regulation
  • Energy Management Act of January 2001
  • Chapter IV entitled " Measures to Enhance
    Efficient Use of Energy" deals specifically with
    the ways to promote energy efficiency such as
    minimum energy efficiency requirements, energy
    audits, energy auditors and co-generation of heat
    and power (CHP) with capacity of 5 MWt, 10 MWe
    (steam turbines), 2 MWe (gas turbine) and 0.8 MWe
    (gas engines).
  • Decree 150/2001 on minimal energy efficiency of
    power and heat production, 12 April 2001
  • Decree 151/2001 on energy efficiency of heat
    distribution, 12 April 2001
  • Proposal of the Decree on energy efficiency of
    energy use in buildings

25
Main barriers for CHP and district heating (1)
  • Policy Framework
  • State Energy Policy does not specify any
    quantitative targets in CHP
  • Energy Act does not meet requirements of the
    Energy Policy in CHP promotion.
  • Legal Framework
  • Missing Decrees on bay-back tariffs for power and
    heat from CHP
  • Obligation to purchase power and heat from CHP
    may create negative reaction on the market
  • Mandatory energy audit for assessment on
    efficiency of CHP project may not an efficient
    tool

26
Main barriers for CHP and district heating (2)
  • Financing
  • Barriers in economics of CHP schemes
  • Cost effectiveness of CHP installations is given
    by the share of total costs for production and
    distribution of energy and revenues for sales
  • Internal rate of return is then low compared to
    other projects
  • Capital intensity is high compared to other heat
    solutions and thus lower capital intensity with
    higher operational cost intensity is given
    priority
  • Barriers in capital availability and requirements
  • In-house capital is usually missing, mainly in
    case of municipalities
  • Private capital is difficult to involve (high
    interest rate, high transaction costs, high risk
    perceived by the lender, etc.)
  • The commercial risk of unreliable revenues from
    electricity and heat sales is high
  • Czech investors have low credit-worthiness
  • Limited public grant sources (State programme for
    energy savings)

27
Main barriers for CHP and district heating (2)
  • Financing
  • Additional barriers
  • Complex and timely procedure of public
    procurement by local authorities which makes
    difficulties for ESCOs.
  • In the governmental sector new financial rules
    allow for multiannual financing. The institutions
    have not yet become familiar with the rules. Need
    to be developed before ESCOs enter successfully
    this sector.
  • The rules for depreciation of equipment are not
    convenient for energy technologies and make
    problems for new investments with high capital
    cost.
  • A shortage of expertise exists to develop a
    bankable project proposal
  • Investors have limited experience in working with
    foreign and international financial institutions
  • Banks miss a long-term view on investment
    opportunities, well developed energy concepts and
    proper project development (knowledge)

28
Main barriers for CHP and district heating (3)
  • Knowledge, awareness and capability
  • In municipal CHP plants a lack of knowledge
    exists in operating the plants . This is
    sometimes solved by contracting to external
    organisations, or by selling the plant to a
    private owner.
  • Many potential users and possible investors are
    not aware of the advantages of CHP, in particular
    of small-scale CHP.
  • At the same time, experience is lacking in
    dealing with proposals for CHP investments.
  • In addition, smaller banks may not have
    specialised skills in assessing the CHP project.
    This lack of experience leads to large overhead
    costs for the development of small CHP projects.
    At the same time, the need for external qualified
    assistance is underestimated, as well as the
    necessity op proper project development and its
    relevant costs.

29
Conclusions and recommendations
  • The Government should
  • Eliminate price distortions between natural gas
    and electricity tariffs.
  • Lift the current price control for household
    tariffs under a determined ceiling (price cap per
    square metre) to ensure that energy saving
    investments (possibly by ESCo, EPC) are made for
    mutual benefits of operators and customers.
  • Promote cost-effective cogeneration and metering
    at building level.
  • Reconsider the obligation to purchase electricity
    from CHP.
  • The regional and local municipalities should
  • Develop their Energy Policy
  • Make energy audits of existing DH networks, HOB
    and CHP plants
  • Consider possible implementation of CHP schemes
    where economically viable

30
Comments to outcomes of the Phase 2
31
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32
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33
Proposed structure of analysis of CHP potentials
in the Euroregion NISA/NYSA/Nieße
  • Methodology for Phase 3

34
Phase 3 Review of identified Tasks (1)
  • Aim It is expected that the introduction of a
    new legal, administrative and regulatory system
    and mainly opening energy market would influence
    the expansion of centralised and decentralised
    CHP and district heating.
  • The following tasks are envisaged
  • Task 1 Brief analysis of power and heat supply
    with the stress on the current situation in CHP
    and district heating in the Neisse-Nisa-Nysa
    Euroregion. Existing studies/analysis will be
    used as much as possible to minimise duplication
    of the work. Close collaboration with regional
    state administration and local municipalities as
    well as with energy utilities, industries, and
    other independent power and heat producers will
    be used to get as reliable data as possible.
  • Task 2 Assessments on the needs for
    rehabilitation of existing heat only boilers and
    district heating systems and analysis of possible
    combination of their rehabilitation with an
    implementation of CHP technology.

35
Phase 3 Review of identified Tasks (2)
  • Task 3 Assessment on the technical potential of
    CHP and district heating development and
    calculation of the impact of new legal,
    administrative and regulatory systems and market
    opening on the economic CHP potential in the
    Neisse-Nisa-Nysa Euroregion.
  • Task 4 Review of technology options convenient
    for implementation in the Neisse-Nisa-Nysa
    Euroregion taking into account local and regional
    conditions (availability of local energy sources,
    availability of natural gas, requirement to
    protection of the environment etc.).
  • Task 5 Calculation of impact of extension of
    district heating and CHP on improvement of the
    energy efficiency and environment in the
    Neisse-Nisa-Nysa Euroregion.
  • Task 6 Identification of Pilot actions - this
    task should focus primarily on identification of
    pilot actions in municipalities, commercial and
    public segment with the stress on identification
    of potential projects. The task should also focus
    on best practice in CHP on the municipal level
    and take into account the availability of fuels.

36
Methodology for Phase 3 Proposed structure of
analysis of CHP potentials in the Euroregion NISA
  • AIM not to analyse a very accurate CHP potential
    but the following issues
  • Rough estimation of technical potential of CHP by
    sector/site and by technology option.
  • Analysis of recently successfull / unsuccessful
    CHP projects and also projects
  • Identification of few pilot actions/projects in
    key sectors
  • Simulation of the impact of new legal,
    administrative and regulatory systems and market
    opening on the economic potential of CHP
  • Description of energy planning and project
    development processes, including major barriers
    to implementation of concrete project.
  • Draft of chapters 3 and 4 of the Action Plan
    (role of municipalities/utilities promotions CHP
    and possible actions).
  • The methodology applied to analyse the CHP
    potential - combination of top-down and
    bottom-up approach. Top-down is the
    identification of potential on the basis of the
    regional analysis. Bottom-up is on the basis of
    individual (potential) projects.

37
Analysis of CHP potentials
Euroregion Nisa-Nysa-Neisse
PL
D
CZ
Selection of basic statistical units for analysis
of CHP and DH potentials
Collection of basic statistical data, data about
already installed CHP and DH sources and possible
future plans, implemented CHP projects
Evaluation of implemented CHP projects
Definition of criteria for evaluation of
potential CHP applications
Evaluation and update of collected data according
to the defined criteria
Definition of typical technological solutions of
CHP (model CHP projects)
Allocation of model CHP projects to each
statistical unit matching the criteria
Comparative CHP case study for selected model
CHP project
CHP technical potential
Definition of economic evaluation methodology
CHP economic potential
38
Analysis of CHP potentials(1) COLLECTION OF
BASIC STATISTICAL DATA
  • A. Selection of basic statistical units for
    analysis of CHP and DH potentials (? regional
    administration units ?)
  • B. Collection of basic statistical data about
    each part of ERN according to statistical units
  • inhabitants, buildings by type, availability of
    natural gas network, availability of DH network,
    energy supply/consumption and its structure (if
    available), potential of biomass use, waste water
    treatment plants / landfills, etc..
  • C. Collection of data about already installed CHP
    and heat sources and possible future plans
  • data from suppliers, municipalities (development
    plans, energy concepts), emission sources
    registers (CZ, available in PL, D ???).

1 - statistical matrix
39
Analysis of CHP potentials(1.C) Analysis of
recently successful / unsuccessful CHP projects
  • The implemented projects should be described as
    exactly as possible
  • Type of fuel(s) used
  • Type of technology / supplier
  • Power and heat capacity (kWe, kWt), capacity
    range
  • Heat and power efficiency ()
  • Utilisation time (hours) (at nominal capacity)
  • Total investment costs, including civil
    engineering works, average connection costs,
    start up costs (local currency or Euro)
  • Fixed O M costs (local currency or Euro/year)
  • Marginal operating costs (local currency or
    Euro/kWh or GJ generated)
  • Fuel consumption or power/het production (kWh,
    GJ)
  • Electricity and heat price (for sale)
  • Fuel price
  • Financing, including subsidy scheme if any
  • Sector
  • Ownership structure

40
Analysis of CHP potentials(2) DEFINITION OF
CRITERIA FOR EVALUATION OF POTENTIAL CHP
APPLICATIONS
  • Definition other evaluation criteria will extend
    the statistical background with further
    quantitative and non-quantitative information by
    each statistical unit (municipality).
  • This information should be specifically focused
    on potential for development of CHP sources and
    ntypical applications of CHP from more or less
    organisational or managerial point of view.
  • Selection of criteria / questions is quite
    flexible and can be based on examples of typical
    applications of CHP. The extension of statistical
    background with evaluation criteria can have the
    form of a table or checklist for each statistical
    unit (municipality).

2 - statistical matrix updated with evaluation
criteria w/ answers
41
Analysis of CHP potentials(3) DEFINITION OF
TYPICAL TECHNOLOGICAL SOLUTIONS OF CHP APPLICABLE
IN THE REGION
  • Steam CHP
  • by typical capacity range (up to ca. 2 - 3 types)
  • Natural gas - gas engines, gas turbines
  • by typical capacity range (up to ca. 4 - 5 types,
    for example in CZ gas engine 22 kWe, 140 kWe,
    250 kWe, 900 kWe, 1600 kWe)
  • Biomass / biogas / biodiesel fired CHP
  • CHP based on fuel cells etc. (maybe not in the
    timeframe to 2010)
  • Each technological solution to be described by
    the same structure as in 1.C
  • Comparative case study (CZ/D/PL) for 1 selected
    comparable technological solution

42
Analysis of CHP potentials - (4) EVALUATION OF
TECHNICAL REPLICATION POTENTIAL OF IDENTIFIED
TECHNOLOGICAL SOLUTIONS
  • technical replication potential of each of
    identified technological solutions will be
    evaluated by each statistical unit based on
    previously collected statistical data and answers
    to evaluation criteria gt the identified
    technological solutions or model CHP projects
    will be allocated by each statistical unit
  • number of CHP projects and total capacity
    (preferably given by range) will be evaluated and
    specified by each statistical unit

43
Analysis of CHP potentials - (5) EVALUATION OF
ECONOMIC POTENTIAL OF CHP BY EACH STATISTICAL UNIT
  • Two different approaches (to be discussed)
  • 1. Comparison of competitiveness of heat produced
    by CHP to standard heat sources
  • necessary input data investment, operating
    costs, lifetime, price of electricity (own
    consumption or purchase), utilisation time -gt
    heat electricity production
  • output price of heat to be compared with price
    of heat from local heat or DH sources -gt is price
    of own heat lower? -gt CHP is economically viable
    and competitive
  • 2. Analysis of payback of investment to CHP
    source
  • necessary input data investment, operating
    costs, lifetime, price of electricity (own
    consumption or feed-in), utilisation time -gt heat
    electricity production
  • price of heat (must be competitive to standard
    sources) is also an input
  • output simple payback or other economic
    criterion (NPV, IRR ..) -gt comparison to limit
    value (ex. simple payback lt 10 years) -gt is
    lower? -gt CHP economically competitive

44
Analysis of CHP potentials - (6) EVALUATION OF
ECONOMIC POTENTIAL OF CHP BY EACH STATISTICAL UNIT
  • Two different approaches (to be discussed)
  • 1. Comparison of competitiveness of heat produced
    by CHP to standard heat sources
  • necessary input data investment, operating
    costs, lifetime, price of electricity (own
    consumption or purchase), utilisation time -gt
    heat electricity production
  • output price of heat to be compared with price
    of heat from local heat or DH sources -gt is price
    of own heat lower? -gt CHP is economically viable
    and competitive
  • 2. Analysis of payback of investment to CHP
    source
  • necessary input data investment, operating
    costs, lifetime, price of electricity (own
    consumption or feed-in), utilisation time -gt heat
    electricity production
  • price of heat (must be competitive to standard
    sources) is also an input
  • output simple payback or other economic
    criterion (NPV, IRR ..) -gt comparison to limit
    value (ex. simple payback lt 10 years) -gt is
    lower? -gt CHP economically competitive

45
Next steps and other issues
  • Brief discussion of the next steps
  • Other project phases
  • Preparation of the next meeting
  • Presentation of project outcomes

46
Brief discussion of the next stepsTime schedule
of the project
47
Other project phases (1)
  • Phase 4 Analysis of possible sources of
    financing CHP
  • Availability of financing sources seems to be a
    crucial barrier for many CHP and district heating
    projects in most of countries. Major barriers and
    possible sources of financing will be analysed
    and recommendations will be given in this field.
    The following financing sources will be analysed
    national/international grant financing, ESCOs,
    project financing, commercial loans, etc.
  • The content of the Phase 4 will be further
    discussed when the outputs of the Phase 2 are
    available.
  • Output of the Phase 4 Working paper
  • Methodology for Phase 4 March Consulting by 15
    September 2001

48
Other project phases (2)
  • Phase 5 Drafting the Action Plan for promotion
    of CHP in the Region
  • The proposal of the Action Plan for promotion of
    CHP and district heating in the Neisse-Nisa-Nysa
    Euroregion will be developed ready for the
    implementation by regional associations and
    administration, local municipalities, energy
    utilities, industries and other independent power
    and heat producers, financiers, technology
    producers, project developers, etc.
  • The Action Plan will be based on results of
    previous tasks and would include the following
    major chapters
  • Chapter 1 Brief review of the current situation
    in CHP and district heating and the impact of
    legal, administrative a regulatory framework
    changes, privatisation and opening energy market
  • Chapter 2 Potential for extension of CHP and
    district heating and impacts on the environment
    and major barriers to this extension

49
Other project phases (3)
  • Chapter 3 The role of national and regional
    authorities in promotion of CHP and district
    heating and the list of possible actions in this
    field
  • Chapter 4 The role of energy utilities and
    independent power and heat producers in promotion
    of CHP and the list of possible actions in this
    field
  • Chapter 5 The system of financing of district
    heating and CHP and
  • Chapter 6 Evaluation of social, economic and
    environmental benefits of the Action Plan
    implementation.
  • The content of the Action Plan will be further
    discussed and adjusted, if needed, during the
    third project team meeting when the outputs of
    the Phase 2-3 are available and after the
    discussion with beneficiaries and other
    stakeholders (e.g., energy utilities).
  • Output of the Phase 5 Draft Interim Report,
    Action Plan

50
Other project phases (4)
  • Phase 6 Dissemination of the results and the CHP
    Action Plan
  • Web site
  • Workshops and seminars
  • Training of selected staff of the regional
    authorities/local municipalities who will be
    responsible for future implementation of the
    Action Plans
  • Papers with the summary of the project outputs in
    journals and presenting them on conferences, both
    in the EU and in the Czech Republic, Germany and
    Poland on national and/or regional levels.

51
Preparation of the next meeting
  • Date
  • second half of September, or
  • first half of October
  • Place
  • Jelenia Gora, Poland
  • Agenda
  • presentation and discussion of draft outputs of
    the Phase 3 and the structure of the Interim
    Report
  • discussion of the methodology of Phase 4
  • discussion of extended outline of the Phase 5
  • seminar
  • other project outcomes (web-site, papers,
    training, etc.)
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