UPDATE 3-U.S. awards $503 mln for renewable energy projects

(Adds increase in U.S. renewable electricity generation, grants for Spain's Iberdrola SA, paragraphs 8-10)

By Tom Doggett

WASHINGTON, Sept 1 (Reuters) - The U.S. Energy and Treasury Departments on Tuesday announced $503 million in government cash grants to companies developing renewable energy projects.

The funding will help meet the Obama administration's goal of doubling U.S. renewable energy production over the next three years, creating jobs and providing financing on easier terms than many companies can obtain in the private sector.

This the first round of some $3 billion in direct payments to companies in lieu of tax credits to eventually support an estimated 5,000 biomass, solar, wind and other renewable energy production facilities.

"These grants will help America's businesses launch clean energy projects, putting Americans back to work in good construction and manufacturing jobs," said Energy Secretary Steven Chu.

The money comes from the economic stimulus package approved by Congress earlier this year.

Previously, energy companies could file for a tax credit to cover a portion of the costs of a renewable energy project. Under the new program, companies would forgo the tax credits in favor of an immediate reimbursement of a portion of the property expense.

"This renewable energy program will spur the manufacture and development of clean energy in urban and rural America, allowing us to protect our environment, create good jobs and revitalize our nation's economy," said Treasury Secretary Tim Geithner.