Re: Transfer switch
I hope the 3 sets of 500s are copper, if they are AL your coming up short of 1000 amps.
3 sets of 400 Kcmil CU or 3 sets of 600 Kcmil AL would be adequate.
If you choose to run a grounding conductor than yes one 2/0 must be installed in each conduit.
250.122(F)
For what its worth if the circuit has a neutral it must be run in the raceways with the other conductors switched or not.
300.3(B)