The objective of this work is to develop a methodology for the quantitative analysis of the long-term competitiveness of hydropower in the liberalized European electricity market. The methodological approach of the developed model is based on a multi-period, mixed-integer linear optimization. The developed model is exemplarily applied to the Swiss energy supply system. Due to the internationalization of the European energy markets, neighboring European countries are also considered to adequately account for the impacts of interregional electricity exchange options. This work provides a solid decision-making basis for the renewal, expansion, and decommissioning of hydropower plants. Furthermore, the developed methodology provides price information for electricity over a long-term perspective.