Hydroelectric Power: How it Works. Hydropower or hydroelectricity refers to the conversion of energy from flowing water into electricity. It is considered a renewable energy source because the water cycle is constantly renewed by the sun. Historically, one of the first uses of hydro power was for mechanical milling, such as grinding grains. Today, modern hydro plants produce electricity using turbines and generators, where mechanical energy is created when moving water spins rotors on a turbine.