Micro Hydro is a term used for hydroelectric power installations that produce up to 100 kW of power.Hydropower is based on simple concepts. Moving water turns a turbine, the turbine spins a generator, and electricity is produced. Many other components may be in a system, but it all begins with the energy already within the moving water.

Water power is the combination of head and flow. Both must be present to produce electricity. Consider a typical hydro system. Water is diverted from a stream into a pipeline, where it is directed downhill and through the turbine (flow). The vertical drop (head) creates pressure at the bottom end of the pipeline. The pressurized water emerging from the end of the pipe creates the force that drives the turbine. More flow or more head produces more electricity. Electrical power output will always be slightly less than water power input due to turbine and system inefficiencies.

Head is water pressure, which is created by the difference in elevation between the water intake and the turbine. Head can be expressed as vertical distance (feet or meters), or as pressure, such as pounds per square inch (psi). Net head is the pressure available at the turbine when water is flowing, which will always be less than the pressure when the water is turned off (static head), due to the friction between the water and the pipe. Pipeline diameter has an effect on net head.

The majority of microhydro systems use batteries to store electric energy. The turbine drives a generator which charges a battery bank. An inverter converts the direct current (DC) into alternating current (AC) that can be used for typical household loads.

According to the EIA, the average energy consumption of a house in the southeast is 1,100 kWh/month which could be completely satisfied by a 1.5 kW turbine. A system providing even a fraction of this energy may still be a good investment. Microhydro is often the most cost effective way to renewably generate electricity - in many cases competing with the price of grid power - with no emissions.

Micro hydro systems complement photovoltaic solar energy systems because in many areas, water flow, and thus available hydro power, is highest in the winter when solar energy is at a minimum.