A dynamic programing model is formulated for the development of the hydroelectric potential of a river basin, with the objective of meeting power requirements projected over time at minimum discounted cost. Hydroelectric projects within the same river basin tend to be highly interdependent since upstream storage capacity creates technological external economies for downstream sites. These interdependences are accommodated within the model, and application to the sequencing of projects in a planning situation for a particular river basin demonstrates that these interdependencies do not increase significantly the difficulty of analysis.