is there a scientific explanation how water dowsing works? They have been drilling for water next to my place for two days. At 150m down without success they gave up. The old toppie on site with the dowsing rod told me that he can usually pinpoint the location of groundwater. He could however not explain to me how it actually works. 

Yes and no (with qualifications either way).

Firstly finding an aquifer is either very easy or very difficult. Some formations hold water throughout like a sandstone which is both porous (i.e can hold water) and permeable (can transmit water). Unconsolidated soils and deeply weathered formation also have that property. Other formations are impermeable and water is held in faults, joints and other cracks in the rock. In the first case water is found easily (providing that the water table is shallow enough to be found) , in the second case you must drill into a water bearing fracture at depth which is a bit of a hit an miss scenario. Some structural analysis and geophysical techniques may improve your odds of success here, but there is no certainty.

In the case of water diviners, knowing something about the local geology, and   which boreholes in the area are dry or strong, and skinnering at the kooperasie, kerk and kroeg and a lot of confirmation bias are probably the source of most of the water diviners success. 

With google earth images you can often see water bearing fractures as they have bigger trees with roots in the water, so that is an easy place to start.

My business partner who is also a geologist and done a lot of field work has told me that he has used dowsing with bent wires to pick up contacts under soil cover, so he claims that method works, but I don't remember exactly what sort of contacts he was mapping.

Interesting topic. Even if somewhat less to do with power.

When I was about 15 years old my uncle took me aside and said "let's see if you are part of the family". He proceeded to cut a Y shaped fresh branch out of a nearby bush and stripped the bark off the short ends and showed me how to hold it with some tension so the long part pointed upwards. Then he told me to walk in a certain direction across the garden. I remember two parts of this: The first was my smirk and rolling of eyes at what was clearly something weird - the second was my astonishment just moments later when the tip of the branch forced itself downwards. I say forced because with all my might I would not stop the sort ends from rotating in my clenched fists. Astonished I proceeded to run around the garden to trace the "veins".

Then I forgot all about it.

Cue some 40 years later (yeah, yeah, I know). I bought a property and needed to drill for water. The drillers arrived with diviner in tow. The diviner did his thing and pointed to a location. A few days later drilling was to commence but the location was not suitable for a number of reasons so I took a single long brass brazing rod, bent it so I had a short L and proceeded to walk around my property. To my surprise I could confirm the location pointed out but also found a great vein in a much better place it was weak but very wide. They got the diviner back and he proclaimed there was nothing there. I insisted they drill here. So they started and drilled and drilled (no water). Increasingly despondent I told them to carry on. Then at 95 meters through mostly solid rock the dust became moist. Another 5 meters and the whole drill rig shuddered as it broke into a cavity. Water ! Plenty and excellent quality. Perhaps just luck but who cares ?

I also managed to trace the outline of an old pool in my garden long buried with the rod.

How does it work ?

I have no idea. I gave the rod to my wife and she gets absolutely nothing. I tried it with a nephew of mine and it works great with him.