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Brazil has chosen 341 solar projects with a combined capacity of 11.26GW to compete at its First Energy Reserve Auction to be held on 28 August.

The Brazilian government's Energy Research Agency (EPE) announced that the state of Bahia had the highest potential with 125 projects of 4GW combined capacity.

Piaui came second with 61 projects of 2GW combined capacity, followed by Sao Paulo, Rio Grande do Norte and Pernambuco, which each have potential for more than 1GW combined capacities.

EPE President Mauricio Tolmasquim said: “The large number of qualified projects predicts strong competition in the auction, which will benefit the customer.”

GTM Research analyst Adam James said that more than 11GW clearing  is encouraging news for the Brazilian PV sector and it demonstrates the government's willingness to acknowledge the value of solar in the grid.

James added that projects that clear in the auction still need to overcome some barriers to development, especially currency risk with PPAs signed in Real and high taxes on PV equipment.

He said: "While the ceiling price is not too low, the currency and tax issues create a de facto high floor price for these bids -- below which projects will not be profitable."

The amount of PV to clear the auction has yet to be determined with clearance levels to be based on the allocation cap and the viability of the project bids.

James said: "We currently expect over 1GW of PV to be deployed in 2017, but Brazil is on-watch with risk skewed significantly to the upside pending a successful auction and viable project development pathways.

"We expect 5.7GW to be installed in Brazil by 2020, with 96% of that installed after 2016."

Back in July, EPE registered 649 solar projects totalling 20.9GW capacity for is Second Reserve Energy Auction scheduled for 13 November this year.

Bahia again attracted the most renewable energy projects with 192 solar projects with a combined capacity of more than 6GW.

This article has been updated to include comment from Adam James.