US stimulus funds spur wind projects in Q3 - group

* 5,000 MW now under construction, 38 pct below 2008

* Texas, Oregon, Illinois install most wind energy in Q3

* Industry group says manufacturing remains "uncertain"

LOS ANGELES, Oct 20, (Reuters) - New installments of U.S. wind energy in the third quarter reached nearly 1,650 megawatts, helped by stimulus funds for renewable energy projects, an industry group said.

The new projects breezed past the 1,210 MW of capacity installed in the second quarter, the American Wind Energy Association said on Tuesday.

Wind power has been one of the fastest growing sources of power generation, but the credit crisis is one reason that the expansion has slowed. So the U.S. Department of Energy has stepped in to spur green projects with a grant program.

"The money is now flowing and is a huge driver. That's why this quarter is a lot stronger than what we expected," said Elizabeth Salerno, the group's director of industry data and analysis, referring to the federal program.

The grants doled out in September just over $1 billion in cash instead of tax credits to renewable energy projects. Wind projects have gained the bulk of the funds so far, with $950 million in grants, Salerno said.

So far this year new wind power systems under construction have totaled 5,000 MW, about 38 percent below a year ago.

Texas kept its top spot in the group's state rankings. The state added 436 MW of new wind capacity. That includes 197 MW of wind power added to a massive wind complex near Roscoe, Texas, which received federal grant money.

Oregon and Illinois ranked second and third, respectively, adding 251 MW and 201 MW of new wind capacity.

The industry group said wind turbine manufacturing remains uncertain and lags levels from a year ago.

Wind turbine makers like Denmark's Vestas Wind Systems (VWS.CO), Germany's Nordex AG NDXGk.DE's U.S. unit, and India's Suzlon Energy Ltd (SUZL.BO) have invested in U.S. manufacturing plants.

The U.S. wind power additions in 2008 pushed the nation past Germany as the world's leading wind power generator, but China is expected to become the world's top producer this year.

(Reporting by Laura Isensee; Editing by Anna Driver and Richard Chang)