Financial Aspects


Probably the question which arises most when looking into schemes is ‘how much will it cost?’. The table below can be used to provide a indicative cost per installed kW.

The final cost will vary depending on site specific issues such as the type of scheme, if there is any existing infrastructure you may have, and how much you want to do yourself.

Small schemes are nearly always a little more expensive per kilowatt than bigger schemes because there are some fairly fixed costs to account for, such as the turbine, the turbine control equipment and grid connection.

Low head sites (down to 1m) are more numerous, however, the machinery is usually larger (hence more expensive)  – this is because low head schemes will need to deal with larger volumes of water to generate a given output.

High head (say 50m) sites can be the most cost effect sites as the turbine size is small for the relative output, however, there may be additional costs associated with long pipes.

These installation costs are sourced from BHA (British Hydropower Association) Capex (Capital) and Opex (Operational) costs. Installation costs will vary depending on specific site conditions, however, the below table is a good first guide to what can be expected.

Limit (kW)
Limit (kW)
Capex Opex
Fixed Cost
per Site (£)
Cost per Installed
kW Output (£/kW)
Maintenance (£)
0 15 8,000 8,000 2,500
15 50 12,000 6,000 5,000
50 150 4,000 15,000
150 500 3,750 35,000


For example: if you had a site capable of generating 20kW peak output then the expected cost is estimated to be (20 x £6,000) + £12,000 = £132,000


The income it can generate is also subject to some variations. You will be unlikely to have the system generating at full power all the time, perhaps on average it will run at 50% capacity. The use the electricity is put to will also be important. If you are using it to lower your own bills, then the price you usually pay will be the value of each unit or kWh – this might be 10p per unit. If you are selling to the national grid, then each unit is worth a minimum of 3.1p.

Payback is often quite long, because of the nature of high capital costs, and low running costs. However, if you are prepared to make a long term investment, a well designed plant will continue to run cheaply and effectively for many years. Again the BHA small hydro guide has lots more information on this.

FiT (Feed in Tariff) is a payment for energy, that is likely to be a payment greater than the standard power price, that is paid to generators using ‘emerging technologies’ and often from a renewable source. These generators are paid for every kilowatt-hour of electricity they generate or for the electricity that is exported to the distribution network. See table below for the banding of prices paid for different hydro scheme outputs:

Lower Limit
Upper Limit
Tariff (p/kWh)
Fixed Export
Tariff (p)
Total Tariff
0 15 20.9 3.1 24.0
15 100 18.7 3.1


100 2000 11.5 3.1 14.6
2000 5000 4.7 3.1 7.8


For example: if you had a site capable of generating 20kW peak output then at a 50% capacity factor the average output would be 10kW. This equates to 10kW x 24hrs/day x 365 days/year x £0.218 = £19,096 per annum income.