China Power, a subsidiary of China Holdings, has been granted exclusive and first refusal rights to develop 300 MW of wind projects in Ontniute, Inner Mongolia, over the next three years. The company says it will develop six 48.9 MW wind farms as part of its Inner Mongolia Ontniute Wind Energy Power Project. The construction agreement with the Ontniute local government also allows for a potential second phase, which could see total capacity rise to 1000 MW spread across 20 projects. The Ontniute government, which will facilitate all necessary government approvals, has granted China Power land rights for up to 200 square kilometres of land and China Power has committed to investing up to CNY 2.7 billion ($396 million) in the project, 35% in cash equity and 65% in bank loans. China's government guarantees loans at a preferential rate as part of the deal. China Holdings hopes most of the planned projects will be operational by 2010-2011. They will operate under a 25-30 years license. Under China's laws, China State Grid must buy all the electricity generated at a guaranteed price of CNY 0.50-0.55/kWh ($0.073-0.08/kWh), with annual increases of 5% to keep pace with inflation.