Normally, small-scale hydro installations in rural areas of developing countries can offer considerable financial benefits to the communities served, particularly where careful planning identifies income-generating uses for the power.

The major cost of a scheme is for site preparation and the capital cost of equipment. In general, unit cost decreases with a larger plant and with high heads of water. It could be argued that small-scale hydro technology does not bring with it the advantages of ‘economy of scale’, but many costs normally associated with larger hydro schemes have been ‘designed out’ or ‘planned out’ of micro hydro systems to bring the unit cost in line with bigger schemes.

This includes such innovations as using:

• Run-of-the-river schemes - this does away with the cost of an expensive dam for water storage
• Existing infrastructure, for example, a canal which serves an irrigation scheme
• Electronic Load Controllers - allows the power plant to be left unattended, thereby reducing labour costs, and introduce useful by-products such as battery charging or water heating as dump loads for surplus power; also does away with bulky and expensive mechanical control gear.
• Siting of power close to village to avoid expensive high voltage distribution equipment such as transformers

Costs vary depending upon the particular project, but as a rough guide, these projects cost just over £800 per kilowatt of power generated. So a system with a capacity of six kilowatts – enough to drive a mill and provide electric light to a community of 20 families – would cost about £5,000.

The benefits of micro hydro power include:

1. ‘Fuel-free’ source of power
2. Negligible local environmental impact
3. Reduction in greenhouse gas emissions
4. Constant generation over long periods unlike wind and solar power
5. Good correlation with demand (more hydro energy is available in winter when  heating loads are high)
6. Long lifetime of systems, typically 25 years or more
7. Low maintenance requirements and running costs
8. Reasonable payback for grid -connected systems, often 10 years or less