Small hydro systems can provide electricity for: central-grid, isolated-grids, and/or remote power supplies. Small hydraulic power also provides an extra contribution to national electrical production in the case of consumption peaks. Although hydro is currently the second most used renewable energy source in the world, still there is a significant unexploited potential. The clean development mechanism (CDM) may act as an additional incentive for further diffusion in the developing world. This paper explains hydro energy techno-economics, followed by a description of the social and environmental implications of small-scale hydro. Moreover, the financing conditions for such projects are presented, as also an indicative set of case studies of small hydro projects in the developing world. Our research supports the argument that incorporating small hydro into an integrated sustainable energy strategy will serve the threefold energy policy objective of security of supply, environmental protection and competitiveness and significantly contribute toward achieving the Millennium Development Goals and sustainability.
