Pico hydro electric power is both reliable and efficient form of clean source of renewable energy. This paper describes the design and development of pico-hydro generation system using consuming water from water tank of residential buildings. Water flow in the domestic pipes has kinetic energy that has the potential to generate electricity for energy storage. An introduction of three new mechanical arrangements namely the air bladder for water pressure maintenance, U-tube piping and broad nozzle pipe end are included for better working and energy generation. It produces electricity with no fuel cost and low maintenance. We could install a mechanical arrangement to generate electricity from the potential energy possessed by water storage tank from a water head of even 3m and above very easily. Hence, this paper is conducted to develop a small scale hydro generation system using consuming water from water tank as an alternative electrical energy source for residential use.