With its numerous rivers, Canada currently produces and uses the most hydropower. The US is second.
The above answer is extraordinarily outdated; the first source–where the main statistics come from–are from 1996. Since then, other countries–namely China–have moved forward in leaps and bounds to dwarf the hydroelectric capacities of Canada. The figures here are as of 2009 (and hence, I assume, far more relevant to you).
So, back to the original question. It depends on whether you look at it as a flat number of watt-hours or as a percentage of the country’s total energy use.
In terms of straight watt-hours produced, China is #1, producing 585.2 TWh/year.
On the other hand, if you want to know which country supplies the largest percentage of its energy needs with hydroelectric power, then Paraguay supposedly supplies 100% of its needs with hydroelectric (note that Norway is not far behind, generating 98-99% of its power from hydroelectric sources).
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