The ancient Romans used water pressure to bring the city's monumental baths and fountains to life. Today modern Romans Flavio and Valerio Andreoli are using it to produce clean power. Encouraged by generous renewable energy incentives, their company, Hydrowatt, specializes in generating electricity from turbines in aqueducts. "Without producing any kind of waste, we use energy that would otherwise be lost," Flavio Andreoli says as he squeezes his 6-ft., 3-in. frame down the stairs and into a subterranean plant the size of a two-car garage.

Located in the hills of Central Italy, 150 miles northeast of Rome, the room is filled with buzzing turbines that tap into the Ascoli aqueduct to produce 2 million kilowatt-hours a year. Hydrowatt generates nearly 60 million kWh per year—enough for about 30,000 homes—from 40 plants on aqueducts across Central and Northern Italy, making it the largest producer of its kind in the country.

Ancient Rome was known as Regina Aquarum, or "The Queen of Waters," reflecting the skill early engineers showed in harnessing water to feed the city's hundreds of fountains and power the empire's mills. They could make water run uphill through the use of gravity and pressure, providing Romans two millennia ago with as much as 250 gallons of water per person daily. The first of the city's 11 ancient aqueducts opened in 312 BC, and the remains of Roman waterworks can be found from England to North Africa.

The brothers tap into modern water pipelines that typically follow the same routes as the old aqueducts. Much like ancient engineers who studied the land and looked for sources at higher elevations to provide the pressure needed to reach Rome, Hydrowatt's engineers seek out places where pipelines have valves designed to release excess pressure as the water flows rapidly down the mountainsides. Once they identify such a site, the brothers offer local authorities that control the aqueducts a deal to replace the valves with Hydrowatt's turbines. "We saw there was this excess pressure from water that was lost and could even pose a problem, so we replaced the valves with turbines that could make energy," Andreoli says. "Around this idea we built a company."

A Europe-wide push to get 20 percent of energy from renewable sources by 2020 has led governments to finance projects through incentives and so-called feed-in tariffs, which require utilities to pay above-market rates for green power. Italian utilities pay 22 euro cents (28c) per kWh of hydro energy, about triple the rate in France and Spain and nearly double Germany's, according to researcher Europe's Energy Portal. Given environmental concerns, traditional hydro projects are tough to sell in Italy, says Tatjana Eifrig, an energy analyst at Banca Finnat Euramerica in Rome. Smaller plants, though, "are extremely interesting, and we see a lot of room for growth in the next two years," she says. "They're helped by incentives, which offer needed startup support to a kind of business that is highly productive once under way."

Andreoli says Hydrowatt is "small but profitable," with revenue of about €11 million ($14 million) last year. "Incentives certainly allowed us to start off, but profitability is now guaranteed even without them," says Andreoli, 41, an engineer and native Roman whose grandfather was deputy mayor of the city in the 1950s. The brothers recently bought four small hydroelectric plants in New England, and they aim to double production globally in the next 36 months by adding more plants and diversifying into biomass and other renewables.

Installing Hydrowatt's turbines costs €1,700 to €2,700 per kilowatt of capacity, while onshore wind plants in Italy cost €1,500 to €3,000 per kW and solar runs €4,500 to €6,000 per kW. More important, hydro plants need neither sunshine nor a stiff breeze to produce power, so they operate all the time. That means each kilowatt of capacity translates into 8,000 kWh of power annually, Andreoli says, at least four times the average output of solar or wind plants. "Small hydro is a good way to go beyond wind and solar and make use of Italy's water resources," says Edoardo Liuni, an analyst at market research firm Il Nuovo in Rome.

Italy, where 19 percent of energy comes from water power, leads the European Union in small hydro plants (those with a capacity of less than 10 megawatts), according to the European Small Hydropower Assn. "Small hydro is developing very rapidly all over the world and is an important part of renewable energy," says Fatih Birol, chief economist of the International Energy Agency.

The bottom line: An Italian startup is tapping into aqueducts to generate electricity. It's now planning to expand in the U.S.

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