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This paper presents work currently being carried out in California on evaluating market effects. We first outline an approach for conducting market effect studies that includes the six key steps that were developed in study plans: (1) a scoping study that characterizes a particular market, reviews relevant market effects studies, develops integrated market and program theories, and identifies market indicators; (2) analysis of market evolution, using existing data sources; (3) analysis of market effects, based on sales data and interviews with key market actors; (4) analysis of attribution; (5) estimation of energy savings; and (6) assessment of sustainability (i.e., the extent to which any observed market effects are likely to persist in the absence or reduction of public intervention, and thus has helped to transform the market).We describe the challenges in conducting this type of analysis (1) selecting a comparison state(s) to California for a baseline, (2) availability and quality of data (limiting analyses), (3) inconsistent patterns of results, and (4) conducting market effects evaluations at one point in time, without the benefit of years of accumulated research findings, and then provide some suggestions for future research on the evaluation of market effects. With the promulgation of market transformation programs, the evaluation of market effects will be critical. We envision that these market effects studies will help lay the foundation for the refinement of techniques for measuring the impacts of programs that seek to transform markets for energy efficiency products and practices.