Run-of-river hydropower in the United Kingdom (UK) and Ireland is a small but vital component of renewable electricity generation that enhances grid diversification and resilience, contributes to the net-zero emissions targets, and provides local community benefits. Planning approval by environmental regulators for hydropower water abstraction is based on the abstraction licence conditions (ALCs) that dictate when and how much water may be taken from a given stream location. Although ALCs for non-environmentally sensitive rivers vary across England, Wales, Scotland, Northern Ireland, and Ireland, the impacts of these variations on power generation are not fully understood. Here, we investigate how ALC variations across the UK and Ireland have historically impacted water abstraction and power generation and might continue to do so under future climate conditions. Specifically, we apply five distinct ALCs combination sets, as laid out by the five environmental regulators in the region, to historical observed streamflows and future projected flows (modelled for the RCP8.5 scenario using the EXP-HYDRO hydrological model), at 531 hydropower sites across the UK and Ireland. We then calculate the daily water abstraction potential for each hydropower site and the collective power generation potential separately for Great Britain and the Island of Ireland. Our results show that the ALCs that permit greater use of lower flows allow for more power generation than those that enable abstraction during high flow conditions. The most optimal combination of ALCs for power generation, when compared to those currently in use, increases future generation potential by 30.4% for Great Britain and 24.4% for the island of Ireland, while maintaining environmental protection as per the Welsh guidelines. Our results suggest that ALC policy and regulatory reforms are needed to provide optimal use of future streamflows for hydropower generation while ensuring protection for the environment is maintained.