Is there a limit to the height (fall) needed to produce power? In other words does a drop of 500 feet produce the same power as a drop of 1000 feet? I assume there's a limit on how fast a turbine can spin and also a terminal velocity for water falling through a tunnel? Not sure if I am asking this right but for wind turbines for example 60 mph wind and 40 mph wind are the same, there's a limit on how quick those blades can spin.
There is a limit, but it is rather high. The big constraint is the steel cladding of the shafts --- those nearly vertical tunnels are all "armored", because normal rock would not resist the pressure. The company I work for has plants with 800m ~ 2400 feet height difference running, I know of slightly higher ones in the French/Swiss Alps. Up to 1km is doable with current engineering.
