AbstractIn data‐scarce regions, seasonal hydropower planning is hindered by the unavailability of reliable long‐term streamflow observations, which are required for the construction of inflow scenario trees. In this study, we develop a methodological framework to overcome the problem of streamflow data scarcity by combining precipitation forecasts from ensemble numerical weather prediction models, spatially distributed hydrologic models, and stochastic programming. We use evapotranspiration as a proxy for streamflow in generating reliable reservoir inflow forecasts. Using the framework, we compare three different formulations of inflow scenario structures and their applicability to data‐scarce regions: (1) a single deterministic forecast, (2) a scenario fan with the first stage deterministic, and (3) a scenario fan with all stages stochastic. We apply the framework to a cascade of two reservoirs in the Omo‐Gibe River basin in Ethiopia. Future reservoir inflows are generated using a 3‐model 30‐member ensemble seasonal precipitation forecast from the North American Multimodel Ensemble and the Noah‐MP hydrologic model. We then perform deterministic and stochastic optimization for hydropower operation and planning. Comparing the results from the three different inflow scenario structures, we observe that the uncertainty in reservoir inflows is significant only for the dry stages of the planning horizon. In addition, we find that the impact of model parameter uncertainty on hydropower production is significant (0.14–0.18×106 MWh).