Hydroelectricity is electricity generated by hydropower, i.e., the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy. Once a hydroelectric complex is constructed, the project produces no direct waste, and has a considerably lower output level of the greenhouse gas carbon dioxide (CO2) than fossil fuel powered energy plants. Worldwide, an installed capacity of 777 GWe supplied 2998 TWh of hydroelectricity in 2006. This was approximately 20% of the world's electricity, and accounted for about 88% of electricity from renewable sources.

Most hydroelectric power plants comes from the potential energy of dammed water driving a water turbine and generator. In this case the energy extracted from the water depends on the volume and on the difference in height between the source and the water's outflow. This height difference is called the head. The amount of potential energy in water is proportional to the head. To deliver water to a turbine while maintaining pressure arising from the head, a large pipe called a penstock may be used.

Pumped storage hydroelectricity produces electricity to supply high peak demands by moving water between reservoirs at different elevations. At times of low electrical demand, excess generation capacity is used to pump water into the higher reservoir. When there is higher demand, water is released back into the lower reservoir through a turbine. Pumped storage schemes currently provide the only commercially important means of large-scale grid energy storage and improve the daily capacity factor of the generation system. Hydroelectric power plants with no reservoir capacity are called run-of-the-river plants, since it is not then possible to store water. A tidal power plant makes use of the daily rise and fall of water due to tides; such sources are highly predictable, and if conditions permit construction of reservoirs, can also be dispatchable to generate power during high demand periods. Less common types of hydro schemes use water's kinetic energy or undammed sources such as undershot waterwheels.

A simple formula for approximating electric power production at a hydroelectric plant is: P = ρhrgk, where P is Power in watts, ρ is the density of water (~1000 kg/m3), h is height in meters, r is flow rate in cubic meters per second, g is acceleration due to gravity of 9.8 m/s2, and k is a coefficient of efficiency ranging from 0 to 1. Efficiency is often higher (that is, closer to 1) with larger and more modern turbines.

Annual electric energy production depends on the available water supply. In some installations the water flow rate can vary by a factor of 10:1 over the course of a year.