Energy, in the form of electrical power is an essential requirement of modern society. Be it for industrial production or day-to-day domestic use, economy of electrical power is a crucial factor in the national development and quality of life of people in a country. Though two to three decades ago national electrical energy requirement of Sri Lanka was predominantly supplied by hydropower, present day scenario shows a strong dependency on fossil fuels for power generation. Apart from obvious environmental impacts, this has resulted in high economic rates for electrical power in the country as compared to neighbouring nations. Stifling of national development is an invariable outcome of such a scenario. However, high electrical energy prices have transformed hydropower options previously categorized as non-viable due to high capital expenditure or low capacity, into alternatives worthy of consideration. It is in this light that tapping of residual hydropower potential in the country has gained its present status. Coupled with the liberalization of the power generation statutes in the country, mini-hydropower projects have gained considerable popularity in the past few years. If related environmental concerns are adequately addressed, miru-hydropower generation is an eco-friendly, sustainable and economical option for localized power requirements, rural electrification as well as feeding the national grid.