Small hydro is the development of hydroelectric power on a scale serving a small community or industrial plant. The definition of a small hydro project varies but a generating capacity of up to 10 megawatts (MW) is generally accepted as the upper limit of what can be termed small hydro. This may be stretched up to 30 MW in the United States, and 50 MW in Canada. In contrast many hydroelectric projects are of enormous size, such as the generating plant at the Hoover Dam (2,074 megawatts) or the vast multiple projects of the Tennessee Valley Authority.

Small hydro can be further subdivided into mini hydro, usually defined as less than 1,000 kW, and micro hydro which is less than 100 kW. Micro hydro is usually the application of hydroelectric power sized for small communities, single families or small enterprise.

Small hydro plants may be connected to conventional electrical distribution networks as a source of low-cost renewable energy. Alternatively, small hydro projects may be built in isolated areas that would be uneconomic to serve from a network, or in areas where there is no national electrical distribution network. Since small hydro projects usually have minimal reservoirs and civil construction work, they are seen as having a relatively low environmental impact compared to large hydro. This decreased environmental impact depends strongly on the balance between stream flow and power production. One tool that helps evaluate this issue is the Flow Duration Curve or FDC. The FDC is a Pareto curve of a stream's daily flow rate vs. frequency. Reductions of diversion help the river's ecosystem, but reduce the hydro system's ROI. The hydro system designer and site developer must strike a balance to maintain both the health of the stream and the economics.

Generation of electric power

Hydroelectric power is the generation of electric power from the movement of water. A hydroelectric facility requires a dependable flow of water and a reasonable height of fall of water, called the head. In a typical installation, water is fed from a reservoir through a channel or pipe into a turbine. The pressure of the flowing water on the turbine blades causes the shaft to rotate. The rotating shaft is connected to an electrical generator which converts the motion of the shaft into electrical energy.

Small hydro is often developed using existing dams or through development of new dams whose primary purpose is river and lake water-level control, or irrigation. Occasionally old, abandoned hydro sites may be purchased and re-developed, sometimes salvaging substantial parts of the installation such as penstocks and turbines, or sometimes just re-using the water rights associated with an abandoned site. Either of these cost saving advantages can make the ROI for a small hydro site well worth the use of existing site infrastructure & water rights.

Project design

Many companies offer standardized turbine generator packages in the approximate size range of 200 kW to 10 MW. These "water to wire" packages simplify the planning and development of the site since one vendor looks after most of the equipment supply. Since non-recurring engineering costs are minimized and development cost is spread over multiple units, the cost of such systems is improved. While synchronous generators capable of isolated plant operation are often used, small hydro plants connected to an electrical grid system can use economical induction generators to further reduce installation cost and simplify control and operation.

Micro-hydro plants may use purpose-designed turbines or use industrial centrifugal pumps, connected in reverse to act as turbines. While these machines rarely have optimum hydraulic characteristics when operated as turbines, their low purchase cost makes them attractive for micro-hydro class installations.

Regulation of small hydro generating units may require diversion of water around the turbine, since the project may have no reservoir to store unused water. For micro-hydro schemes feeding only a few loads, a resistor bank may be used to dissipate electrical energy as heat during periods of low demand. In a sense this energy is wasted but the incremental fuel cost is negligible so there is little economic loss.

Other small hydro schemes may use tidal energy or propeller-type turbines immersed in flowing water to extract energy. Tidal schemes may require water storage or electrical energy storage to level out the intermittent (although exactly predictable) flow of power.

Since small hydro projects usually have minimal environmental and licensing procedures, and since the equipment is usually in serial production, standardized and simplified, and since the civil works construction is also small, small hydro projects may be developed very rapidly. The physically small size of equipment makes it easier to transport to remote areas without good road or rail access.

Micro-hydro installations can also provide multiple uses. For instance, micro-hydro projects in rural Asia have incorporated agro-processing facilities such as rice mills - alongside standard electrification - into the project design.