As with all power sources the goal is to turn different types of energy into electricity. Petroleum stores energy in the chemical bonds, the sun radiates light energy down onto earth that we harness, and wind and water have kinetic energy (the energy of motion) that we can harness. Basically the water is flowing down stream. We can put something like a water wheel into the stream. The current from the water turns the wheel. The wheel then powers other parts like a mill stone and does work. We could also have the water wheel turn a generator and instead of directly powering the mill we can now use the generator to create electricity, store or move the electricity and do work away from the water source. Dams store water and thus allow us to control the amount of water that goes through and therefore the amount of energy we get.
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