Small-scale hydroelectric power: a European ruling paves the way for renewals and investment
The Court of Justice of the European Union has resolved the issue of concessions: the modernisation of small power stations can now increase their generation capacity by 5–10 per cent, but this depends on the administrative decisions that still need to be taken
Key points
Small hydroelectric power stations can generate more electricity using the water they already have available. Investments in turbines, generators and plant can lead to ‘increases in output of 5–10 per cent’, says Paolo Picco, president of Federidroelettrica, an association comprising 200 members and representing around 20 per cent of small-scale producers.
This prospect has arisen thanks to the Court of Justice of the European Union. Its judgement of 3 September ruled that the Bolkestein Directive does not apply to plants whose main activity is the generation of electricity, expressly including amongst these small hydroelectric plants (up to 3,000 kilowatts of average annual rated power), which therefore no longer need to be put out to tender.
The issue of concessions had stymied investment in both sectors – small and large plants alike – because producers were unsure of the future of the plants they were operating. Now, however, the prospects are opening up for small-scale hydropower schemes, offering a clear investment outlook where it is possible to invest capital that will be recouped over time.
The northern regions account for over 80 per cent of production
Applying the growth figures estimated by Federidroelettrica to total generation (from both large and small schemes) could yield significant benefits in terms of output, particularly in the six northern regions analysed, which account for approximately 83.5 per cent of the country’s total hydroelectric generation. In Piedmont, production could increase by 889 GWh; the region currently produces around 8,888 GWh per year, and it is the only region for which estimates exist regarding the contribution of small-scale hydropower: ‘Over a third of production comes from small-scale plants,’ notes Picco. The two most significant regions, however, are Lombardy and Trentino-Alto Adige, where the calculations indicate an increase of up to 1,353 GWh per year for the former and 1,319 GWh per year for the latter (based on the 10 per cent scenario).
The figures on additional generation, as estimated by the association, are ‘figures that must be treated with methodological rigour’, as they are based on 2024, which was ‘a hydrologically favourable year’. In 2025, national hydroelectric generation fell by over 21 per cent due to ‘low rainfall’, and even the first eight months of 2026 – according to Terna’s figures – showed a 19 per cent decline compared with 2025. The sector is by its very nature variable, but “its scale remains significant” and makes the renewal of concessions and the improvement of plant efficiency “issues worth bringing to the table with the regions and the Ministry”, reiterates the president of Federidroelettrica.
