Shrewsbury Town Council has committed funds in its 2021/22 budget to look again at the viability of the project at the weir, which was first mooted more than 10 years ago.
The scheme almost came to fruition in 2017 when a community interest company got as far as the design and public consultation stages.
But the group was forced to abandon the project when changes to feed-in tariffs – money paid for electricity supplied to the National Grid – rendered it unviable.
The project would require some of the water to be diverted to underground turbines under the banks of the river, generating power which could be supplied either to the National Grid or directly to a nearby consumer.
Shrewsbury Town Council leader Alan Mosley said: “The land that would be needed for the underground turbines, on the Underdale side of the river, is owned by the town council, although we would require access from land that is owned by Shropshire Council.
“So what’s recently happened is that, with both councils drawing up plans for climate change mitigation, we have resurrected the hydro plan again to see if we can re-instate it or draw up a new one, and get a scheme underway there.
“We are committed, if at all possible, to getting it done.”
The town council has allocated around £30,000 in its budget towards a feasibility study, with Shropshire Council having already set aside money for the project.
A Shropshire Council report from 2015 said tenders received when the scheme was first put forward in 2010 put the total cost of the project at around £1.5 to £2 million.
Councillor Mosley said that while the scheme would not “change the world” it would generate enough electricity to power the equivalent of around 400 homes every year, demonstrate both councils’ commitment to tackling the climate crisis, and serve as an educational tool for local school children to learn about hydro power.
He added: “We are delighted to play a part in re-examining this important project.
“Many people were disappointed that the previous project failed to reach fruition.
“The climate emergency makes it vital that we move to much more green energy and the hydro scheme at the weir will make a good local contribution to our objectives.
“There is significant community interest and support so that we very much hope that the feasibility study results in a positive outcome and that an exciting scheme can proceed.”