Thank you for your question. Much information can be found on the operation of hydroelectric power. However, in just a few words, they work on a concept called Electromagnetic Induction. While the Science and math behind it can be quite difficult, the concept is fairly simple. Basically, a coil of wire in a changing magnetic field will have a current induced if connected to a load. The trick is to get a changing magnetic field with respect to the coil of wire. This can be done a few ways, but the two you will want to focus on is either rotating the coil in close proximity to the magnet or rotate the magnet in close proximity to the coil of wire. This is what a hydroelectric turbine does. As water falls through a turbine it spins either magnets with respect to coils of wire or vice versa to induce a current.
For your project, you could build a water wheel that when it spins would rotate a magnet connected in some way to the axis of rotation with a coil of wire positioned such that the magnetic field is parallel to the coil.
You can find a decent description of hydroelectric power here:http://water.usgs.gov/edu/hyhowworks.html
Additionally here is a SB project that deals with Faraday's Law and Lenz's Law, the underlying scientific principles that governs Electromagnetic Induction. http://www.sciencebuddies.org/science-f ... p097.shtml