If you have a system that is feeding the grid, then batteries are not required as you can feed your hydro power into a grid tied inverter. This usually means that when the grid is down, you cannot power up anything in your house. There are now some inverters that allow for some output as long as this does not exceed what is being generated. Since there are battery based inverters that can operate on or off grid, systems are often installed that use these so that there will be power for the household when the grid is down.
The beauty of a battery based system is that only the average load needs to be generated. In this way, power is stored when not needed and can be used at much higher levels when required.
The only way around this is with what is called an AC direct system. This system generates AC power right from the turbine/generator and that powers all the loads. This means that the peak load must always be generated so when a motor like the one in your well pump starts, there is enough power to start it—or the system will collapse. This usually means that the generator has to make a minimum of about three kW. This all means that if you compare this to a battery system, the AC Direct one will need a much larger turbine/generator and pipeline and also consume much more water.