YORK, Pa. - For a state with energy-production roots drilling deep into the coal mines and oil fields, the time has arrived for a heavenward look to try to harness the power of the sun.

Gov. Rendell last week signed a bill here dedicating $650 million to the development of alternative and renewable energy, with a whopping 28 percent going to solar energy.

Environmentalists and energy-policy experts say the fund is a significant investment in clean energy and will boost Pennsylvania's profile as a leader in emerging energy technology.

The bill makes a historic investment in solar energy, an emerging technology that Rendell administration officials compare to the status of wind energy six years ago.

The legislation provides $100 million for solar power and water-heating systems on homes and small businesses, paying up to 35 percent of the installation cost. It also provides $80 million for larger, commercial-scale projects.

Kate Marks, energy program director with the National Conference of State Legislatures, called the fund a "leading investment in renewable energy" that demonstrates how states, not the federal government, are taking the lead.

Under the law, Pennsylvania will borrow $500 million over the next two years for grants and loans to attract businesses in the alternative-energy field and help existing companies improve energy efficiency.

A separate $150 million loan program will offer rebates to homeowners to weatherize their houses or install solar panels, and provide subsidies for low-income homeowners who need assistance with energy bills.

The fund is the second part of the administration's Energy Independence Strategy, which began in 2004 with the creation of new energy markets through mandates that utilities use alternative energy.

"We have got a bill that does so many things all in one time," Rendell said before signing it at a former auto-parts factory that will become a high-energy-efficiency residential and commercial development. "It's not just enough to create markets. We have to help young, fledgling businesses."

The administration estimates that since 2003, when Rendell took office, the state has invested $1 billion in alternative and renewable energy and as many as 3,500 jobs have been created.

Energy-policy experts could not identify a similar-size fund and said it was impossible to compare with investments in other states that may be larger but covered a number of years.

For instance, New Jersey has handed out $227 million in rebates to businesses and homeowners for solar systems in the last seven years.

The bill was passed as part of the state budget negotiations after a long-sought compromise with Senate Republicans, who opposed Rendell's original $850 million proposal because it depended on more borrowing and a monthly fee on utility bills.

Business interests object to such large government subsidization of what they call "unproven" technologies and the Rendell administration's apparent favoritism toward "green" companies. David N. Taylor, executive director of the Pennsylvania Manufacturers' Association, said his group had opposed the bill as "profoundly misguided."

"If we want to hasten the arrival of the next generation of energy breakthroughs, we need a pro-growth environment where research and development can take place," he said. "We can't mandate it into existence or subsidize it into existence."

Roy Kienitz, Rendell's deputy chief of staff, disputed the notion that wind and solar technologies were not proven, and said the targeted investment in those areas was part of Rendell's long-term vision to shift the state's economic focus.

"Pennsylvania was at its pinnacle 100 years ago with steel, oil and railroads, but employment in those industries has declined by 50 or 75 percent," Kienitz said. "We have to set our economic investment in finding growing industries like biotech and renewable energy."

Maureen Mulligan, a solar-industry lobbyist, called the fund the "major jump start the industry was looking for in order to invest in Pennsylvania."

The commercial funding, in particular, could be used to attract manufacturing that would create jobs and provide local products, which keeps shipping costs down.

Catherine Neil, one of the owners of Heatshed, a solar-installation company in Bucks County, said homeowners were hungry for the new technology.

A typical system providing half a household's electricity costs about $35,000.

Rebates at the upper limit of 35 percent would be $12,250. So with $100 million, that kitty could prompt more than 8,000 systems.

Philadelphia's Andrew Kleeman, with the solar-power company EOS Energy Solutions, agreed that the demand was there, but said he didn't think the $180 million was enough to give the industry the full-throttle boost it needed.

"I think it's a great step," Kleeman said. "The total dollars sound like a huge amount. It's really not."

---

Where the Money Goes

The newly created $650 million energy fund will support conservation and spur renewable energy development. Among the projects:

$165 million for loans and grants for alternative and renewable energy projects for businesses and local governments.

$180 million for grants and loans for solar energy-related economic development, plus loans, grants and rebates to cover

35 percent of the costs of residential consumers and small businesses for installing solar-energy technology.

$40 million to support start-up services to develop and implement energy-efficiency technology.

$25 million for wind energy and geothermal projects.

$25 million for residential and commercial "green" building projects.

$40 million for energy assistance for low-income residents.

$25 million for pollution-control technology for energy generators to meet state and federal standards.

$92.5 million to give homeowners and small businesses

25 percent of the cost to buy and install energy-conservation devices and weatherize buildings and $5 million for an Energy Efficiency Loan Fund.

$50 million in tax credits of up to $1 million a year to develop alternative-energy projects.

SOURCE: Pennsylvania Governor's Office