Hydropower has been in use for millenia and it has been used to produce eletricity for a little over a centruy. The energy in falling water is captured through the use of either a turbine or a water wheel and is then used to drive an electric generator, or applied to some other task through mechanical means.
The above micro-hydro power system uses an automobile 12 volt DC alternator to power lights in a rural cabin. It requires a stream that runs all year with a waterfall or other slope of 20 degrees or more to produce enough force to drive the waterwheel. The waterwheel is connected by a pulley and belt to either a gearbox or transfer pulley which in turn drives the alternator. Power from the alternator goes through a power inverter to operate 110 volt AC devices as well as a charge controller to a battery bank to provide back-up power if the waterwheel has to be shut down for any reason.
Since a car alternator will not provide enough power for the average home with PC's, home entertainment systems, etc. some items such as major appliances should be powered separately by other fuels such as natural gas or propane (LP).