In some provinces， small hydropower stations have been or are about to have a bigger market share. In order to achieve the optimized deployment of hydropower resources， small hydropower stations should participate in the electricity market in the future. However， compared with regular hydropower stations， small power stations， because of their unique characteristics， will face higher risks of output uncertainty in the market. Moreover， having large number of small hydropower stations individually participating in a market will reduce the market efficiency. An agent mechanism is designed to deal with the competition of small hydropower stations in the market. A supply function model considering inflow uncertainty is proposed， and a composite optimization strategy combining stochastic simulation and greedy algorithm is applied to solve this model. An uncertain gaming analysis procedure is proposed as well. Numerical results are given to show the effectiveness and validity of the proposed approach in reducing risks for small hydropower stations participating in an electricity market.