Currently, the electrical energy crisis is an important issue in Pakistan. Due to the shortage of electrical power, inhabitants of the country are facing 10–12 h of blackouts in urban areas and 14–20 h in rural areas daily. The current demand for electrical power is 15,000 MW, which is expected to increase further to 49,078 MW by 2050. Conventional energy sources are unable to meet this demand. This paper discusses the potential of Small Hydro Power Plants (SHPPs) to partially overcome the shortage of electricity. Overall, 60,000 MW of hydroelectric resources have been identified in Pakistan. whereas, approximately 11% of the identified resources are operational, producing 7228 MW of electric power. The energy crisis can be easily overcome by installing SHPPs. The use of SHPPs has been estimated to save 120 million tons of coal or 83.3 billion liters of oil in a year. Thus, these plants are environmentally friendly and make a low contribution to global warming. Worldwide, SHPPs provide employment to 0.2 million people. Pakistan Council of Renewable Energy Technology (PCRET) and Sarhad Rural Support Program (SRSP) has installed 1100 SHPPs, with a total capacity of 42.507 MW, which fulfills the electrical energy demand of approximately 0.7 million people in Pakistan.