Northwest China's Xinjiang Uygur Autonomous Region will invest 10.8 billion yuan (1.6 billion U.S. dollars) this year to construct and upgrade the power grid in the region.

According to the State Grid Xinjiang Electric Power Co. Ltd, 2.3 billion yuan will be invested on upgrading the power grid in rural areas of the most poverty-stricken Hotan, Kashgar, Aksu and Kizilsu Kirgiz prefectures in southern Xinjiang.

The investment will also be used on projects to optimize the power grid for business this year, to support the development of small and medium-sized enterprises.

The fund will also be allocated to replace coal with electricity as the main energy source in the most impoverished four prefectures, which will make heating more affordable for rural residents and help protect the local environment, the company said.

The four prefectures sit on the edge of the Taklimakan Desert, the largest desert in China and the second-largest shifting sand desert in the world, where the natural conditions have caused significant poverty.