Needs 10 power.
A water wheel is a machine component that provides power via water flow. To build a water wheel, select uild menu and choose achine components. It requires 3 wood and generates 90 net power, which can be used for operating a pump or mill. You can use axles and gears to access the power produced by a water wheel, or connect machinery like a pump or millstone directly.
Waterwheels have quality levels for both design and building. These can be checked from theoom screen by moving to the entry and pressing enter.
Waterwheels do not work with waterfalls, nor in magma - it takes water that is flowing according to the DF use of the term.
For a basic overview of how the different machine parts work and work together, see machinery.
A water wheel occupies 3 adjacent tiles (N-S or E-W axis, no diagonals).
Although you can build a stable water wheel on solid ground, this isn't going to do you any good. For this reason, water wheels are almost exclusively built in a hanging state with gaps in the floor below. To do this the water wheel must be attached to a nearby machine component. In order to function, a water wheel must attach to other pre-existing machine components only on either side of its center tile.
Power is generated from a water wheel as long as it has flowing water at a depth of 4/7 or greater under at least one of its tiles. The easiest way to achieve this is by placing the water wheel over a river or brook. With a brook you must first channel through the surface since brooks have a floor of sorts over them.
You can transport the power wherever it is needed via horizontal and vertical axles and gear assemblies. It is possible to support a waterwheel by building its center next to a preexisting water wheel's center.
Intuitively one would place a water wheel in a river, but they can also be powered if placed over brook tiles, but only if you first dig through the surface of the brook. Dig a channel three tiles long, right on the brook. The water wheel will sit above this channel.
Any direct connection to a river or brook that has flow (some do not) will power a waterwheel, even if it's a dead end. A floodgate in the channel will not block this flow either. Diagonals do not prevent direct flow from a natural water source. A channel connected to a murky pool will not suffice unless you engineer some sort of perpetual motion machine.
This is by no means the limit of water power from one location, depending on the width of your river/brook/channel you can stack many waterwheels side-by-side (really big assembles will need to be artificial as there's a limit to how wide the game created water flows get). Just remember to make sure there's a support structure in place before you place the next wheel.
 Perpetual motion
Due to the relatively low power draw of a screw pump, a self-powering assembly can be made with a water wheel that still leaves plenty of excess power for other uses. This is an exploit (violating basics principles of physics), and possibly a bug, but this is also Dwarf Fortress, so...
To get it working, you must start the pump manually.*
- (* Exceptions are aquifers, which can sometimes have naturally occurring flow. This is sometimes a good thing, because then a wheel simply works by itself - or a bad thing, if, for example, you want the wheel to not provide any power while you build a pump adjacent to it. It's not clear what causes an aquifer to have flow and then keep it - it's difficult to replicate reliably, and can be lost with additional channeling, so designs will have to be adapted if such are found.)
It is good to have a ready source of water to refill the machine, as water tends to escape and evaporate, and once the water falls below a certain level, the machine stops. Below an earlier level, the power supply becomes intermittent.
║ ═ ╝ ╚ ╔ ╗ ╣ ╠ ╩ ╦ = Wall
+ = Floor
W = Water Wheel
* = Gear Assembly
═ = Axle E/W
║ = Axle N/S
XX = Pump from west
_ = Channel
X = Closed Water Source Opening
*REMEMBER TO BUILD AN ADJACENT PUMP, HORIZONTAL AXLE OR GEAR ASSEMBLY BEFORE THE WATER WHEEL*
 Design #1
XX = Pumps from east
 Design #2
This uses a simple oval as a waterway. Changes to the design to fill that may be needed. Expect spillage from the pump outlet.
X = Pump from south
 Design #3
Dwarven Water Reactor
This compact design, once started, can only be stopped (without complete de-construction of all components) by blocking the tile the pump draws water from, since the pump is directly linked to both wheels - deconstructing one wheel will cause a flood (and almost immediately cancel any job order to deconstruct the other components), and deconstructing the pump will cause both wheels to collapse (unless they are attached to machinery outside them, not shown). Power is routed up from the pump or off to the side from a wheel, where a gear assembly can be placed early in the power train, linked to a lever, to disconnect the power at that point.
The design below produces 170 surplus power (less additional power train), almost twice that of the above designs in less than half the space. Expanded versions can produce more power, but should be planned in advance unless you're willing to tear it all down to change the configuration. A second reactor, then connected to the power train, might be better.
X = Pumps from south
Dig the V-shaped channel and fill it with water (either from an outside source or by designating it as a pond). Meanwhile, construct the pump, pumping from the South. Construct the two water wheels. Start the pump manually ( , ) - if there is enough water*, the "reactor" will start immediately and the pump operator will leave. The water from the north end of the pump will spill over the top-most floor tile, filling that to 7/7 and the two tiles east and west of it to ~5/7, but will not overflow back past the water wheel to the walkway area. Note that for the upper level, no southern walls are shown as none are needed.
- (* Have not determined the minimum depth needed. For better flow, you might try a "U-shaped" channel, rather than V-shaped, but that requires 2 more tiles to be filled with water.)
- The ideal amount of water in this design is apparently 63 units of water. In other words six tiles below in the V are full up to 7/7 and three more above are also full up to 7/7 which will generate reliable flow permanently without ever losing any of that water to evaporation. An easy way to do this is to simply leave your pond fill command on after the reactor activates. They will eventually fill it up to the optimal level and stop.
Note: If created in an aquifer, there is a chance that the channeled tiles will have a natural water flow - this will cause the pump to start the moment the first wheel is finished, flooding the work area for the second.
Digging a channel through an aquifer level, which terminates in a pit dug into an aquifer 1 Z-layer below will lead to water flowing down the sluice into a full pond of water; but due to the water absorbing properties of an aquifer, the pond functions as an essentially bottomless pit. Water will permanently flow unless the path to the pit is blocked, but even then will not flood a layer above. This artificial river can be completely contained within your fort, securing your power plant/water source against outside threats/inclement weather. A wheel (or a number, depending on the channel length/width can be assembled and run without even the minimal power drain of a pump. Digging a hole through two layers of Aquifer is technically challenging, but by no means impossible and is repeatable, foolproof and permanent unlike digging a pit and hoping for flow.