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Modern hydro turbines differ from the old water wheels, in that they produce electricity rather than being direct drive.
The amount of power they produce depends on the amount of water flowing through them and the height or head that the water falls. The likely range is from a few hundred watts (possibly for use with batteries) for domestic schemes, to a minimum 25 kW for commercial schemes. A micro hydro plant is defined as below 100 kW.
Hydro systems can be connected to the main electricity grid or as a stand-alone (off-grid) power system. In a grid-connected system, any electricity generated but not used can be sold to electricity companies. In an off-grid hydro system, the electricity can be stored in a battery bank. For either system, the source needs to be relatively close to where the power will be used, or to a suitable grid connection.
There are a number of issues that need to be considered:
Land ownership - you will need the permission of the landowner to build and have access to the powerhouse, intakes and discharge channels.
Planning
In general you will need planning permission. You should always contact your local district or borough council and speak to a planner before proceeding.
Environment Agency
All water courses of any size are controlled by the Environment Agency. To remove water from them (even though it may go back in) will almost certainly require their permission in the form of a licence.
Community hydro projects can also be a viable proposition. Potentially, there are great benefits in clubbing together to increase buying power or sharing expertise.
www.british-hydro.org
www.environment-agency.gov.uk
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