The study carried out for the Forum for Renewable Energy Development in Scotland shows there is still 657MW of financially viable hydro electricity schemes to exploit, enough to power nearly 600,000 homes and half the amount of existing installed hydro capacity in Scotland.
Scottish energy minister Jim Mather said: "In making Scotland the green energy capital of Europe, we will utilise the rich mix of our diverse renewables potential, and hydro remains a hugely important part of that mix. Investment continues, with the Glendoe project near Fort Augustus scheduled to open next spring set to be a significant addition to Scotland's renewables capacity.
"While we are unlikely to see much in the way of further large scale developments, it is clear there is huge untapped potential - and a sustainable and profitable future - in smaller and micro hydro schemes. Each scheme would have to be assessed on its own merits, but if we can turn the tap on to new hydro power we can tackle climate change and continue to stimulate economic growth."
British Hydropower Association chief executive David Williams said: "Hydropower has long been the 'quiet' renewable and this [report] will stimulate development of new projects of all sizes in a country which has already embraced the benign and significant role of this technology."
Scotland has 1379MW installed hydro electric capacity. The study shows that using expected load factors of 40% for run of river schemes and close to 100% for storage schemes, the total number of additional homes that could be powered is 589,000.
The report puts the number of financially viable potential hydro power schemes at 1,019 including 128 new dams.
The Scottish Government is currently considering 10 hydro applications. New applications are being dealt with in line with its new target to come to a decision within nine months, where there is no public inquiry.