Initial Source of Energy


The first step in obtaining hydro-power from water is identifying the source of energy you are attempting to capture.  In other words, are you attempting to use the potential energy of water in a reservoir, the kinetic energy of flowing water, the oscillations of waves, etc.  To obtain power you need to design your system around the source in order to maximize your efficiency. 

Conversion into Electricity


Afterwards, you need to optimize the turbines or other method that you would be using to capture the energy of the flowing water from your source in order to get the most power.  The turbines are connected to a generator, and their rotational motion will build up an alternating current, which is then amplified using a transformer and distributed for use.

Distribution


Power lines directly connect the plant to the national grid, allowing for the distribution of the accumulated energy.


http://science.howstuffworks.com/environmental/energy/hydropower-plant1.htm