The spring-fed hydroelectric power station was built between 1942 and 1944 by Friedrich Johanson (1905–1983), the founder of the Tindioru farm. He built the reservoir's original wooden sheet pile wall, the embankment behind it, and the 370-meter-long canal channeling the springs using nothing but a shovel and a wheelbarrow over two summers. The power station's turbine was designed and manufactured by a team of engineers from Tallinn.

During the war in 1944, the Red Army set the power station on fire, and the original generator was destroyed. A German-owned mobile power station's DC generator found in the forest was installed on the remaining turbine. This restored power station operated until 2009.

Since 2011, the power station has been operating with a new turbine and generator. The wooden sheet pile wall of the reservoir has been replaced by a concrete equivalent. Since the water flow remains stable throughout the year, the power station produces about 5.5 megawatt-hours of electricity per year.

Another, historically earlier hydroelectric power station also operated in the Rõuge area — the Ööbikuoru hydro-workshop, founded around 1912 by Peeter Johanson (later Saarse). There, the power of water was harnessed both to generate electricity and to power tools and machinery.