The contracts are said to be in line with a program formulated by the administration of President Barack Obama to further investment in renewable energy projects.

Contracts were awarded to three companies of Emerald Biofuels Natures BioReserve and Fulcrum Brighton Biofuels, according to Bloomberg.

US Defense Department operational energy assistant secretary Sharon Burke told the news agency that the three companies would further invest $17m for the projects.

The companies would develop plants with capacity of supplying about 150 million gallons of biofuel at a price of less than $4 a gallon, added Burke.

The renewable fuel will be produced from materials such as animal fats, food-processing waste and oil-seed crops, the department stated.

"We see a national security benefit in global diversification of liquid fuels," Burke noted, besides adding that these developments would encourage production of biofuels across the nation.