Power systems firm A-Power Energy Generation Systems Ltd said it has signed a deal, to build a wind turbine production facility, with the Chinese city government of Bayan Nur.

A-Power said Bayan Nur, situated in Inner Mongolia, is located in one of the three premium wind belts in China, and the Chinese central government has approved 2,100 MW of wind power generation in the Bayan Nur region alone.

“The 800 MW annual wind turbine production capacity at this new Inner Mongolia facility combined with over 1,000MW from the first phase of our Shenyang production facility will give A-Power an annual wind turbine production capacity of over 1,800MW by the end of 2009,” Chief Executive Jinxiang Lu said in a statement.

The company said the 290,000 square foot plant should cost about $20 million and is expected to be completed in July 2009. The plant will make wind turbines of 2.5MW and 750kW capacity, it added.

The company said that under the deal, the city government has agreed to tax breaks and to coordinate sales with wind farms in and around Bayan Nur region.

Shares of the company rose more than 3 percent to $29.56 in morning trade on Nasdaq.