Yeah, all our stuff is 240V...we need loads of power, man!

No, water isn't used as the motion force, gravity is - the water just provides the inertia mechanism (the water-mill). Magnets could be used, but there is still drag (albeit minute) because of the construction of the water-mill.
Even if the bearings were vacuum sealed, you'd still get a loss of energy from the bearing mountings.

Perplexing indeed.

The only other option, is 'cold fusion'.
And fuck knows how that works!