Hydropower has been used since antiquity. In India, water wheels and watermills were used for milling. In Ancient Rome, water powered mills produced flour from grain, and were also used for sawing timber and stone. The power of a wave of water released from a tank was used for extraction of metal ores in a method known as hushing. It later evolved into hydraulic mining when used during the California gold rush.

In China and the rest of the Far East, hydraulically operated pot wheel pumps raised water into irrigation canals. In the 1830s, at the peak of the canal-building era, hydropower was used to transport barge traffic up and down steep hills using inclined plane railroads. Direct mechanical power transmission required that industries using hydropower had to locate near waterfalls. Hydraulic power networks also existed, using pipes carrying pressurized liquid to transmit mechanical power from a power source, such as a pump, to end users.

Today the largest use of hydropower is for the creation of hydroelectricity, which allows low cost energy to be used at long distances from the water source.

There are several forms of water power:

Waterwheels, used for hundreds of years to power mills and machinery.

Hydroelectricity, usually referring to hydroelectric dams, or run-of-the-river setups.

Damless hydro, which captures the kinetic energy in rivers, streams and oceans.

Tidal power, which captures energy from the tides in horizontal direction.

Tidal stream power, which does the same vertically.

Vortex power, which creates vortices which can then be tapped for energy.

Wave power, which uses the energy in waves.

Small scale hydropower has been increasingly used as an alternative energy source, especially in remote areas where other power sources are not viable. Small scale hydropower systems can be installed in small rivers or streams with little or no discernible environmental effect on things such as fish migration. Most small scale hydropower systems make no use of a dam or major water diversion, but rather use water wheels.

There are some considerations in a micro-hydro system installation. The amount of water flow available on a consistent basis, since lack of rain can affect plant operation. Head, or the amount of drop between the intake and the exit. The more head, the more power that can be generated. There can be legal and regulatory issues, since most countries, cities, and states have regulations about water rights and easements.

Over the last few years, the U.S. Government has increased support for alternative power generation. Many resources such as grants, loans, and tax benefits are available for small scale hydropower systems.