With the Energy Strategy 2050, Switzerland wishes to focus on balanced utilization of hydropower potentials and new renewable energy sources to cope with nuclear energy phasing out. Integration of large amounts of new renewable energies such as wind and solar power represents a challenging task as far as the power network stability is concerned. Indeed, the intermittent pattern of new renewable energies needs substitution and storage capabilities that hydropower can offer due to the variety of possible technical solutions featuring large flexibility and high performances control capabilities. The production capacity potential must be addressed together with the ancillary services capacity to ensure the stability of the electrical grid. The decision making process for the modernization of hydraulic power plant involves to overcome huge number of possible combinations at early design stages, when each decision has a major impact on the final performance of the hydropower plant. The RENOVHydro project rely on a systematic assessment of the hydropower plants generation increase of each upgrade possible option using the SIMSEN software as a backbone to identify the most cost-effective civil and hydro-electrical options. The SIMSEN simulation software enables to model an entire hydro power plant including hydraulic, mechanical and electrical system and their related control. The numerical models enable considering various hydraulic layout configurations, including non-linear head losses, realistic empirical turbine performance hill chart, generator efficiency as well as operating flexibility offered by variable speed technology. Thus, each hydropower plant upgrade option can be assessed by considering hydraulic structure, hydro units and hydropower station interaction with the grid for the provision of ancillary services, as well. This paper presents the methodology of the RENOVHydro project to determine the best cost-effective modernization options. The RENOVHydro methodology is illustrated on a hydropower plant test case with 80MW installed capacity and comprising 4 Francis turbines operated under a maximum head of 107mWC. Different civil and hydro-electrical options compared by taking into account the available hydrology and the electricity market for a typical year, and then computing the annual energy, the profitability and the energy coefficient to select the optimal solution. Finally, with these systematic studies adaptable to any type of hydraulic machine, the assessment of any scenario is made possible considering economical, technical and environmental aspects. This high level of support for the decision-making process drastically reduces the risks of selecting under-optimal solution. The assessment of the ancillary services of the most promising solutions is then introduced.