Two years ago, British Columbia's premier electric utility company, BC Hydro, issued its "Clean Power Call" - a bid for the province to achieve electric self-sufficiency through renewable energy by 2016. That aggressive goal sparked an intense competition. Renewable energy companies of all stripes were jostling each other to prove that their project was the best, and to win a coveted Electricity Purchase Agreement (EPA).

When the EPAs were finally handed out, one green technology captured over half of the sixteen contracts awarded. The overwhelming winner? Not solar and wind, but a relatively obscure type of hydroelectric power that is quickly becoming all the rage: run of river.

It's no secret that hydroelectricity sits near the top of the renewable energy list. But hydro invariably conjures images of soaring concrete dams, rerouted rivers and flooding, environmental damage and displaced people. Not to mention the stiff price tag that comes with such an immense engineering project.

However, as British Columbia is proving, hydroelectric power generation is not limited to just dams. For junior hydroelectric companies, these run-of-river projects are a less expensive, more efficient, and fish-friendlier way to get in on the energy game. They're also a ground-floor investment opportunity.

Run of river exploits the elevation drop of a river. Power stations are built on rivers with a consistent and steady flow, either natural or regulated by a reservoir at the head of the facility. There is no need to flood large tracts of land to keep the plant humming during the dry season; run-of-river projects simply use a weir (a small, only partially blocking dam) to divert some water via a penstock (delivery pipe). As the water flows downhill, it picks up the speed necessary to spin the turbines in the powerhouse and create electricity. The diverted water then joins the river again through a channel known as a tailrace.

Everything is done within the natural range of the river. There's no need for the concrete monstrosities that come with large-scale damming - or the associated environmental controversy. At the most, a weir is constructed to submerge the mouth of the penstock. Capital outlays are relatively low, the ecological footprint from the projects is quite small, and if the geology is right, engineers can tailor the technology to the terrain, rather than having to wrestle with it.

Run of river just might be the ultimate in green power. On the one hand, with its near-zero emissions, it stacks up favorably against conventional, polluting sources of energy. At the same time, it has a distinct advantage over other renewables, like solar and wind. There's no need for the costly backup generation units these technologies require to operate on calm days or at night.

These power plants have actually been around since the 1970s, but the technology has only started to take off in the last few years. In countries that can, and do, use hydro as a power source, the competition for contracts is becoming fierce. And thanks to the comparatively low costs, junior, small-cap companies are making out especially well, leaving the big boys to handle the staggering debt and the environmental protests associated with huge dams. Smaller-scale projects mean fewer headaches while providing excellent returns on investment.

Of course, nothing's perfect, and run of river has its challenges. One is that without a large dam or reservoir, there is no way to store energy and adjust power output according to peak periods of consumer demand. There are also still environmental issues, albeit much less drastic than with a traditional dam. Somebody will always object to new roads and transmission lines. And while the projects are usually sited away from fish-spawning grounds, aquatic life still can get trapped behind the weirs or at the mouth of the penstock.

But one of the beauties of the technology is its flexibility. Engineering solutions like fish ladders, water-velocity regulators, and careful site design can mitigate many of these concerns. The smarter companies also work closely with local communities, to head off problems early on.

The biggest limitation is geology. These generators can't be built across just any old river; only regions with a favorable lay of the land will do. And the next biggest is probably politics. Some African nations that could really benefit are too unstable to attract sufficient investment capital. Other countries, like Venezuela, deter investors because of the risk of nationalization. Still, the good news is that there is immense potential to be found on almost every continent, while utilization remains in its infancy. And as construction designs improve and engineers innovate, project sites that were formerly only theoretically feasible will become economically viable.

Run of river will not completely replace conventional hydro. It's not meant to. There's no way naturally running water can compete with something like the Three Gorges Dam across the Yangtze River in China, a project which will eventually have a total electric generating capacity of 22,500 megawatts. By comparison, the premier U.S. run-of-river plant - the Chief Joseph Dam on the Columbia River in Washington State - produces a "mere" 2,620 MW.

Be aware, though, that 2,620 MW is hardly trivial. Apply the usual rule of thumb, where one megawatt will supply the needs of 500-900 average houses, and this run-of-river plant could serve as many as 2.4 million homes. Not bad.

As the era of cheap fossil fuels winds down, governments and entrepreneurs alike are searching for alternative energy sources. Given run of river's advantages - low initial cost and maintenance, flexibility, environmental friendliness - it is poised on the brink of a major construction boom, in many more places than British Columbia.

It's going to be an exciting ride, for end users and investors alike.

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