As the water stored in the reservoir of a dam flows out, its potential energy changes to:

Potential energy is the stored energy in any object or system by virtue of its position. The kinetic energy of an object is the energy that it possesses due to its motion.

The water present in the dam has potential energy. There is a tunnel inside the dam that allows some water to pass through it. The potential energy in the stored water changes into kinetic energy when the water moves through the tunnel.