The main objective of The European Renewable Energy Study (TERES) was to assess the long-term prospects for renewable energy technologies in the Member States of the European Union and the countries of Central and Eastern Europe. The study, undertaken on behalf of the European Commission's programme for renewable energy (ALTENER), investigated: - The situation with regard to the current performance of the various renewable energy technologies (RETs); - The costs of existing technologies at current prices; - The prospects for developing these technologies; - The foreseeable reduction in costs as a result of technical progress and mass production; - The technical and economic potential of each technology; - The possible penetration of technologies up to the year 2010 on the basis of four scenarios, using the forecasts of overall energy demand and of electricity demand set out in "Energy in Europe - A View to the Future"; - An analysis of the constraints on further penetration of renewable energy technologies, and policy and other actions to overcome these restraints. In the past, the renewable energy industry has suffered from government indifference and subsidized electric utilities using fossil fuels and nuclear fuels. Now this is changing, as the foundations of energy strategy are also changing. With more emphasis on market forces, sustainability and the costs of environmental damage caused by fossil fuels, at least some of the constraints that have hindered the growth of renewable energy are being removed. However, this study shows that, under existing EC Member State programmes, renewable energy will only increase its contribution to 6.3% of EC primary energy demand by 2010. In order to examine how positive action to promote sustainability and to include external costs which can influence the prospects for renewable energy, various policy scenarios were explored. Under the Commission's proposed policies (ALTENER and the carbon tax), renewable energy could provide up to 9.2% of EC primary energy demand by 2010. If the cost of the environmental damage caused by fossil and nuclear fuel cycles is included in energy sales prices, renewables become much more competitive. If energy prices are adjusted to reflect their full social cost, renewable energy could meet up to 13.3% of primary demand in the European Union and 12.2% in the countries of Central and Eastern Europe by 2010. The study clearly shows that far-sighted and coherent energy policies must be implemented now if renewable energy is to play a significant part in the foundation of a sustainable energy future for Europe in the next century.