WASHINGTON - New worries about the environment, technological advances, and extensions on tax breaks are empowering European wind-energy companies to try their luck in the United States.

The United States has led the world in installing wind turbines for the last two years, but it still ranks behind Germany and slightly below Spain in wind-power production, according to the Global Wind Energy Council. Now, America's renewed embrace of policies to encourage energy alternatives has led companies with years of experience in Denmark, Germany and Spain to invest in the United States, challenging U.S. market leaders and any environmental opposition to building giant turbines.

"We're like the Saudi Arabia of wind, and we just haven't had the big exploration boom yet," said Michael Peck, a spokesman for Gamesa Corporacion Tecnologica S.A., a Spanish company that makes wind turbines in Pennsylvania and develops wind farms around the country.

Two deals announced last month reflect the competition. Portuguese utility EDP - Energias de Portugal S.A. agreed to pay $2.15 billion to buy Houston-based Horizon Wind Energy from investment bank the Goldman Sachs Group Inc., giving the company its first toehold in the United States. And Denmark's Vestas Wind Systems A/S, the world's largest maker of wind turbines, announced plans to build a $60 million wind-turbine blade factory in Colorado, its first U.S. manufacturing plant.

"The U.S. is a bigger area that [European companies] can look to for growth," said Thomas Emmons, senior vice president for structured finance at HSH Nordbank AG, of New York.

On-again, off-again tax credits have hampered growth here, compared with a more stable climate for incentives in European countries. European companies are encouraged that a federal tax credit for wind power has been extended through 2008, and 21 states and Washington are requiring utilities to get electricity from renewable sources.

The United States gets less than 1 percent of its electricity from wind-powered generators, compared with 20 percent in Denmark and 9 percent in Spain. Technological advances could push U.S. wind-power use to 5 percent by 2010, the Electric Power Research Institute says. If the federal tax credit for wind power is maintained, annual installations of wind projects in the United States will more than double by 2011, predicts market-research firm BTM Consult.

"We could have had our own homegrown wind-power companies competing for these new wind-farm developments and manufacturing [plants] had we had the right policies in place," said Ron Pernick, a principal with research firm Clean Edge Inc.

Worldwide sales of wind turbines are projected to rise to $49.4 billion by 2011 from $25.1 billion this year, with the United States and Canada comprising about 23 percent of worldwide growth in wind-power generation, BTM Consult estimates.

Denmark's Vestas had considered a U.S. plant for several years, but found support for renewable energy inconsistent in the United States until recently, said Jens Soby, who heads the company's U.S. operations, which are based in Portland, Ore.

The company's plant in Windsor, Colo., is expected to be completed early next year and is designed to produce 1,200 wind-turbine blades per year, enough to power about 200,000 households. Meanwhile, German industrial giant Siemens AG has taken a shuttered truck trailer factory in Fort Madison, Iowa, and turned it into a factory that makes 150-foot blades for its wind turbines. And Gamesa, which bought Minneapolis wind-farm developer Navitas Energy Inc. in 2002, signed a $300 million deal last summer to make 132 wind turbines for Royal Dutch Shell P.L.C.'s wind-development arm.

Investors are benefiting: Shares of Vestas more than doubled in the last year, and shares of Gamesa are up about 70 percent.

General Electric Co. and FPL Group Inc., major American players, still dominate the market. Fairfield, Conn.-based GE remains the dominant U.S. supplier of wind turbines, supplying 47 percent of installed wind capacity in the United States last year, down from 59 percent in 2005, according to American Wind Energy Association statistics. Siemens, Vestas and Gamesa together had 44 percent of the U.S. turbine market last year. The majority of U.S. wind-power projects are owned by big developers like FPL and their output is purchased by big utilities like Xcel Energy Inc.

Iberdrola S.A., Spain's second-largest power company and the biggest owner of wind farms worldwide, is poised to become a major player in the United States with its $22.5 billion acquisition of Britain's Scottish Power P.L.C., a deal that closed April 23. That gives Iberdrola control of Oregon-based wind developer PPM Energy Inc., a Scottish Power subsidiary and the second-largest U.S. wind-farm owner.

The major challenge for the wind industry is to reduce costs, which can vary dramatically because wind is intermittent and windy spots are often far away from big urban centers that use the most power.

Wind-powered electricity remains more expensive than using coal or natural gas, but cheaper than nuclear power and far cheaper than solar, according to the U.S. Energy Information Administration.