Nowadays, there is no formal method to evaluate the overall performance of hydroelectric generating units (HGUs). In this paper, an economic performance evaluation method for HGUs is proposed, and the corresponding quantitative indices and criteria are introduced. Several new concepts for evaluating the performance of HGUs, such as ideal performance, reachable performance, operational performance, overall efficiency, index of efficiency maintenance, index of operational efficiency, are proposed and defined. Based on analysis of the energy flow of an HGU, a method and related formulas to calculate the energy indices of the unit are presented. Using these proposed qualitative factors, the efficiency characteristics and maintenance state of an HGU can be evaluated. A real case study illustrates the evaluation process of this method. The methodology proposed in this paper paves a new way to evaluate the overall condition and performance of the HGU and provides a new approach to assess the performance of other similar equipment.