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The TanDEM-X mission, result of the partnership between the German Aerospace Center (DLR) and Astrium GmbH, opens a new era in spaceborne radar remote sensing. The first bistatic satellite synthetic aperture radar mission is formed by flying TanDEM-X and TerraSAR-X in a closely controlled helix formation. The primary mission goal is the derivation of a high-precision global digital elevation model (DEM) according to High-Resolution Terrain Information (HRTI) level 3 accuracy. The finite precision of the baseline knowledge and uncompensated radar instrument drifts introduce errors that may compromise the height accuracy requirements. By means of a DEM calibration, which uses absolute height references, and the information provided by adjacent interferogram overlaps, these height errors can be minimized. This paper summarizes the exhaustive studies of the nature of the residual-error sources that have been carried out during the development of the DEM calibration concept. Models for these errors are set up and simulations of the resulting DEM height error for different scenarios provide the basis for the development of a successful DEM calibration strategy for the TanDEM-X mission.