The term pico hydro describes hydropower with an electrical output of up to 5 kilowatts. Where suitable sites exist, this renewable energy option can be very cost-effective for village electrification. A thorough investigation of existing practice in Nepal and Colombia has identified the factors contributing to the emergence of successful pico hydro programs in these countries. Using detailed field data collected during the research visits and computational methods to model scheme operation, ten schemes in Nepal were rigorously evaluated in terms of cost, performance and sustainability. This study identified a high degree of variability with the existing implementation practice. As a result, a versatile new design of turbine-generator unit and a new implementation strategy were developed in order to improve viability and encourage widespread adoption. The field research and subsequent data analysis highlighted the difficulties faced by the developer when trying to select the most appropriate components to form part of an interrelated system, designed for a particular set of site conditions. A review of available computer software concluded that existing tools could not provide the broad range of functionality required for specification of an optimized pico hydro system. New methods were developed to assist developers in minimizing the cost per kilowatt. A bespoke program was written that enables optimized selection of the turbine-generator, penstock and distribution cables from a database of locally available equipment. The program performs numerous iterative calculations to provide a system design tailored to the site conditions using off-the-shelf components. The new turbine-generatOr design and implementation methods have been established through installations in Nepal, Kenya and Ethiopia. In addition to reliability and safety improvements, significant cost reductions have been demonstrated at these schemes, through the use of the optimization methods and implementation strategy developed as a result of the research.