JUDY WOODRUFF: Next: the possibilities of getting more energy through water.

Humans have long harnessed the power of water to perform work. In modern time, hydroelectricity, generated by the power of water flowing through turbines at the base of dams, has been a small, but key source of renewable energy.

But experts say there is a lot of potential for new sources of hydropower. A startup in Portland, Oregon, has developed one system that may one day be in cities around the country.

Hari Sreenivasan has our report. It's the latest story in our ongoing Breakthroughs series on invention and innovation.

HARI SREENIVASAN: Industrial engineer Susan Priddy takes advantage of rare sunny days in Portland to ride her Harley to work. And in her job as director of operations for Lucid Energy, she takes advantage of the regions's abundant water supply. This small start-up has developed a new technology.

SUSAN PRIDDY, Lucid Energy: How's it going today?

MAN: Very well.

SUSAN PRIDDY: What is our energy coming out today?

MAN: Right now, we're running about 40 kilowatts.

HARI SREENIVASAN: Priddy and Lucid engineers were monitoring the energy generated by drinking water as it flows through turbines integrated into these pipes. Lucid has designed the first hydroelectric system designed to harness the energy in gravity-fed drinking water pipes found throughout Portland and in many municipalities around the country.

We dropped in recently for a tour.

SUSAN PRIDDY: So, here we are down in the vaults. We have got water flowing this direction. The turbine is right here. And the flow of the water, because it's a lift-based system, just turns the turbine. And then the turbine is connected to the generator. And from the generator, it goes through some power electronics across the street to the grid.

HARI SREENIVASAN: How much energy is this thing generating?

SUSAN PRIDDY: Our nameplate is 200 kilowatts, so roughly enough energy for — to supply electricity for 150 homes.

HARI SREENIVASAN: The system was installed in Portland late last year and recently began operating at full capacity. Unlike some parts of the country, there's no shortage of water here. The city's well-known downtown fountains and most homes and businesses are supplied with gravity fed drinking water from a pristine forest watershed near Mount Hood.

GREGG SEMLER, Lucid Energy: There's no mystery to what we're trying to do. We're just recovering energy that's embedded in the flow of the water.

HARI SREENIVASAN: Gregg Semler is president and CEO of Lucid Energy. The privately funded company currently employees a handful of bike-riding engineers who spend their days thinking of new ways to tap liquid energy flowing through pipes.

MAN: Is that actually something that was just floating in space?

MAN: This one right here?

MAN: Yes.

MAN: It's mounted to the wall.

HARI SREENIVASAN: Their office is based in a Portland incubator called Hatch, with other small environmentally and socially focused start-ups.

GREGG SEMLER: The advantage of the Lucid pipe system is that we produce electricity all the time, around the clock, without any environmental impact. So, it's very unusual to find sources of energy that you can produce electricity without any environmental impact in today's world.

HARI SREENIVASAN: And how does it compare to the renewable energy sources that most of us are familiar with today, solar and wind?

GREGG SEMLER: When you compare the cost of the Lucid pipe power system with other traditional sources of renewables, like wind and solar, to generate the same amount of energy that Lucid is generating would cost three of four times more for the same amount of energy.

HARI SREENIVASAN: The 60-foot pipe and four turbines inside cost nearly $2 million to build and install, far more than a conventional section of water pipe. But a group of private investors are taking the risk, so it costs the city nothing to try.

The city's power utility, Portland General Electric, PGE, has agreed to buy the energy at the same price as other renewable energy sources for the next 20 years. The plan is for Lucid Energy, the city's water bureau, and the investors to share profits.

WOMAN: This is the first check for us delivering energy and being paid for it. So we are very excited.

HARI SREENIVASAN: Representatives from PGE recently meet with the Lucid team to see how the new system is working.

MAN: Those two units over there are meters that really get to the power purchase agreement. And that's where the money is.

MAN: Yes. We want to see the cash register go up.

MAN: You want it to spin, right?

MAN: We want to produce as much energy as possible.

HARI SREENIVASAN: Charlie Allcock is PGE's business development director.

CHARLIE ALLCOCK, Portland General Electric: Here in Oregon, we have a renewable portfolio standard, where we have to meet, and — by the end of this year, 15 percent of our customers energy use with renewable sources. We have been doing it mostly with wind and some solar. But, if this technology performs well, it will be on our list.

HARI SREENIVASAN: Oregon isn't alone. Hydroelectric power is getting new attention from scientists and investors.

Several East Coast companies are developing turbines to harness the power of tides in New York's East River and off the coast of Maine.

Portland State University vice president Jonathan Fink studies urban sustainability issues. We met him at one of Portland's ubiquitous food truck lots.

Can we get two minted lemonades?

As we began to chat, Portland's notorious wet weather began to create streams of potential energy all around us.

This is awesome.

Fink sees Lucid's technology contributing to a broader effort by communities to move away from non-renewable energy sources.

JONATHAN FINK, Portland State University: In Portland, as an example, we get a lot of our energy from coal-fired power plants 200 kilometers east of here. That's not great.

So how do we replace that? We're not going to replace it with one big nuclear power plant. We're going to replace it with a lot of conservation, a lot of smaller steps like what Lucid is doing, with solar, with wind.

What has to happen nationally and globally is, each city does these experiments, figures out what works, and then they have to exchange that information. And then you add it all up, and cities can really save a lot of energy.

HARI SREENIVASAN: CEO Semler says the focus is now on developing turbines that could be placed in smaller drinking water pipes found closer to homes.

GREGG SEMLER: They might be able to power, like, an electric vehicle charging station essentially with free energy.

HARI SREENIVASAN: The company is currently negotiating agreements with several cities in the U.S., including San Antonio and New York, as well as in other countries. And they hope to have more pipes and turbines in place in Portland over the next few years.

For the PBS NewsHour, this is Hari Sreenivasan in Portland, Oregon.