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.

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."

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.

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."