For his Cape Cod-style home in South Whitehall Township, Don Nelson for years has want­ed rooftop solar panels so he could lower his heating and electricity bills. But the cost — $24,000 for the average house — was way more than he could afford.

That could soon change.

This week, lawmakers in Harrisburg reached agreement on a $650 million energy package that, for the first time, would set aside money for homeowners and businesses to install solar panels and wind­mills or to use geothermal heat.

The package, which still needs a vote, would steer loans and rebates to energy-saving construction projects and devel­opment of alternative energy.

It comes at a time when households are scurrying to find ways to reduce their energy use, anticipating a 30 per­cent increase in their bills when electricity deregula­tion starts in 2010.

Residents are increasing­ly tapping special financing programs such as Pennsylvania's low-interest energy loan program Keystone HELP, which distributed 40 percent more money in the first six months of 2008 than in the same period last year.

Of the $650 million in the energy package, $500 mil­lion will be available immedi­ately. The remaining $150 million will be doled out over seven years and will be used for consumer tax cred­its and rebates for hybrid vehicles.

The package sets aside $25 million for wind and geothermal heat, and the same amount to make buildings more energy-efficient.

Solar is the biggest win­ner of the alternative energies, with $100 million being steered toward residential projects and $8o million going to manufacturers of photovoltaic panels and other projects.

The move couldn't come too soon for Pennsylvania, which follows 33 other states in offering some type of rebate for solar develop­ment.

"When you put it all together, it starts to be the kind of thing that a big home improvement [is some­thing] more Pennsylvanians would be eager to consider doing," said Jan Jarrett, vice president of PennFuture, nonprofit environmental advocacy group. It's unclear how much residents would get in re­bates. In New Jersey, for example, the cost of a solar project is split between the customer and the state.

Some residents haven't been waiting around for the legislation, introduced in early 2007.

Heat Shed, a solar instal­lation company in Revere, Nockamixon Township, has a list of 100 households waiting to have solar panels installed. The bulk of its work is done in New Jersey.

Still, five Pennsylvania homeowners paid for solar panels without grants in 2007, and — in part respond­ing to the pending power deregulation — 10 have committed this year, said co-owner Charles Reichner.

"People are pretty freaked out about the whole energy thing," he said.

"There's tons of people in Allentown that want this. We're hoping this comes through so we can work closer to home, keep our carbon footprint down."

Households are also tak­ing out more loans through programs including Key­stone HELP, the Keystone Home Energy Loan Pro­gram, which provides 8.99 percent fixed-interest rate loans.

So far this year, the pro­gram has distributed $3.5 million, up from $2.5 million in the first six months of 2007. A total of 562 appli­cants sought loans in June, compared with 433 in June 2007, said Shawna Hoff­man, marketing coordinator for the program.

The average loan amount granted this June was $6,227, compared with $5,773 in June 2007, Hoff­man said. An unseasonable heat wave in the beginning of June probably contribut­ed to the spike, she said.

Part of the state's pro­posed energy package could pump as much as $5 million into Keystone HELP, said Peter Krajsa, president of AFC First Financial Corp., the program's lender. Once secured, he said, that amount could be re-invest­ed to bolster the dollars available.

Hellertown resident Marilyn Moreno was ap­proved for a $35,000 se­cured loan in April to install solar panels in her home. Heat Shed completed the work a month later. "The process was quick," she said.

The work couldn't have been done without the finan­cial assistance, Moreno said.

Almost 3,000 homeowners have financed more than $16 million in home improve­ments through Keystone HELP since its inception in 2006. The waiting list is huge: Between 8,000 and 10,000 homeowners have applied.

Nelson, who wants roof­top solar panels for his South Whitehall home, is waiting for an estimate and plans to start work as soon as he receives a grant.

He said that at age 86, he won't recoup in energy savings the money he spends on the panels. But he has a different motivation: his seven great-grandchildren.

"They're the ones that are going to suffer, and I'm not. I'm too old for that," Nelson said. "We've got global warming. We're going to run out of oil. Then what are we going to do?"

VIDEO: South Whitehall resident Don Nelson talks about getting solar panels. www.mcall.com