Update January 25, 2012: I have updated the mesh, added new textures.
Note: While creating my treadmill I felt this mesh would make a great water wheel. The slats are different as are the textures so it is not confused with the treadmill.
It is found under Decorative/Miscellaneous for $50. This works similar to the windmill in that it will reduce the Sims energy bills, and depending on their energy uses, they may earn money from the energy not used.