If I have a waterwheel spinning an alternator, what is the most straightforward way to use the electricity generated to offset/reduce the grid power usage in my home. Basically what kind of components does it take to add a power source to my already existing grid power. what type (voltage and phase) of alternator is the best. I have 240 single phase from the road and a 200 amp panel, residential SE Wisconsin.

The big thing you would need aside from the generation and transmission equipment itself is a grid-tie inverter, which will adapt your source power to match what comes from the utility. If you might generate more than you use at any point, you would also need a special meter from the utility.
http://energyinformative.org/grid-tied-off-grid-and-hybrid-solar-systems/
You will also need a safety cutoff which will shut down or disconnect your system from the grid in case of a grid power outage. This is to avoid electrocuting repair workers on a "dead" utility system.

If you want to arrive at 240V single phase, you are best off generating from a 240V single phase alternator with a voltage regulator.

Car alternators are made to spin at higher revolutions than hydro and wind power typically generate. You can change the gear/pulley ratio, but this compounded by the need to generate an electric field in order to create energy and starts to become problematic and fairly inefficient. Permanent Magnet Alternators/Generators (PMA's, PMG's) do away with the need to create a magnetic field electrically. Missouri Wind and Solar sells a bunch of these for both wind and hydro power generators. They have a bunch of videos on YouTube that are worth a look.

There are also other places online that sell both custom PMA's as well as ones made from old car alternators. You can even buy kits to rebuild an alternator you may have on hand to save money. I haven't looked at it in a while, but MWandS had a bunch of them still for sale on ebay. They usually have lots of things on their ebay store on sale if you are willing to wait and keep an eye out there. There are other brands out there, but some of them take significant shortcuts to shave a few dollars, so it is worth investigating before throwing down any cash.

Also, the amount of power you can create will be determined by the amount of flow and head your water source has. A PMA would need a sizable water wheel to create power and an alternator would need an even larger wheel to produce the same amount of excess energy.

Thank you, I am getting a better idea of what I need now. I only asked in reference to a waterwheel as it is the closest thing to what I am doing. This is a company that makes a contraption kind of like I'm trying to build, they primarily use buoyancy, I am trying to use weight with buoyancy as the return. Working on building the air pump and figuring out the best way to get the weight up and down ad quickly as possible. Not sure what I am building will put out 5kw but if it puts out 1 kw I could just build 5 of them:) Would be nice to get a check from the power company every month instead of the other way around. webpage

Hi John; I have had a micro hydro running for 10 years now and unless something has changed , power company's DO NOT have to buy hydro power from you... renewable power (solar, wind ) they do, but hydro power is not considered renewable by the government. In fact they require licencing of hydro power generation.... (they believe its their water...) they "overlook" small micro hydro at home (mainly because they don't know about it) If you try to sell hydro power to the power company then unfortunately, they will know about yours... you can look forward to licensing ($$$)and bureaucratic inspections...If you can make 5 kw from your waterwheel ,quit the power company and go stand alone, 100% off grid. If you don't like the thought of that ... or can't make as much power as you hope, then consider having both. Use your hydro to charge a set of L-16 battery's , with a pure sine inverter hooked in , use that power for as many things as it can easily run and keep your "street power" for anything else. That way you may be able to cut your bill and wean yourself off of power company juice. And learn how to live off grid at the same time. Good Luck with your plans , keep posting on your progress!

Thank you, waterwheel/windmill is the closest thing I could come up with to gather suggestions, this will be a weight powered shaft at low rpm so very similar to hydro/windmill but not tapping into any rivers so they shouldn't have anything to complain about.