Like for the wind power topics, we will not talk about big hydro project which can give power to towns and even regions. We will talk about small hydro suitable for domestic, business, or small villages and about pic-hydro systems (<20kW).
With wind turbines, you must consider the wind first, here, you mus consider the resource : water. Do you have a stream near, larger enough to dray a sufficient amount of energy is the first question.
You must think about several parameters. The first is the flow of the water and the slope or the heigh difference between the capture and the generator. The second parameter to consider is the amount of energy you need and the peak power demand at the consumer level.
When we do an energy test, we can see that a small turbine produce a lot of energy. This is because unlike the sun which produces energy 8h per day or the wind turbines produce only when the wind is strong, the hydraulic produce energy 24/24h.
Take for example a hydraulic turbine which produce 250W per hour, multiply with the operating time (24h), the result is 24 x 250 = 6000Wh. Even if we consider energy losses because of the storage and the transformation, the energy earned is interesting.
Storage or no storage ?
We can do without storage batteries (chich are expensive and not eternal) when consumption is low and the total installed power does not exceed the power of the turbine. Think about the devices power at their start up.
If there is no batteries, the system will be composed by a turbine with a generator and produce 220V. It is less expensive and simpler to maintenance.
However, we will have to store energy if there is some consumption peak higher than the generator power.
There will be a battery bank, a converter and a controller with some resistances to avoid a battery overload.
The schema of a pico hydro plant is very close to the schema of a wind turbine.