The European Space Agency plans to launch an Earth Resources Satellite (ERS-1) in a few years' time with a view to establishing an operational system of such satellites. It will carry two microwave devices giving information on waves: a precision altimeter and a synthetic aperture radar (SAR). Careful assessment of the potential performances of these instruments is therefore being carried out. In the precision altimeter, the leading edge of the returned radar pulse is smeared by the rough sea surface. The degree of smearing is highly correlated with the significant waveheight and appears to be independent of other parameters. The main fundamental limitation to operational use comes from the sampling variability, which necessitates long averaging times. The SAR gives pictures of the sea surface that often show wave patterns, but their precise interpretation is an exceedingly complex problem, which is still not properly understood. Even with three satellites in orbit, coverage in U.K. latitudes would be only once a day along the sides of a diamond-shaped grid with a side of approximately 500 km. An initial assessment indicates that this coverage is probably enough to be very useful in the open ocean, but that this limitation and the size of the altimeter `footprint' become increasingly serious as a coast is approached.