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As ecological civilization construction receives growing attention in China, the eco‐friendliness of the power supply structure is becoming increasingly important. Thermal power and hydropower are the two major power sources in China. Hydropower has both positive and negative effects on the ecosystem. However, there are few studies on the comprehensive impact of hydropower on the ecosystem. Therefore, the main innovation of this article is to integrally and comprehensively study the impact of hydropower to propose recommendations for hydropower development. The study of hydropower's effects on the overall ecosystem including resources, the environment, and economic society reflects the integrity, and the simultaneous study of hydropower's positive and negative effects reflects the comprehensiveness. First, this paper constructs a system dynamics (SD) model that can analyze the impact of replacing thermal power with hydropower on the ecosystem and proposes an improved coupling coordination degree (CCD) model. Then, this paper takes the province of Fujian as an example for SD scenario simulation and proposes recommendations for each indicator in the ecology subsystem. Finally, this paper performs CCD analysis on subsystems of the ecology subsystem in different policy scenarios and provides suggestions for future hydropower development in Fujian. Results show that hydropower technology improvement and efficiency increase (HTIEI) is more conducive to the development of the overall ecosystem. The scientificity of the current hydropower policy in Fujian is proven through theoretical analysis, and further hydropower development proposals are proposed. This paper provides a basis for the formulation of power generation policies and promotes ecological civilization construction for Fujian. The proposed methods in this paper can also provide tools for policy research on clean energy power generation. [ABSTRACT FROM AUTHOR]