[maxerickson]

The reservoir provides an opportunity to even out the energy production (and helps with flood prevention and irrigation, two big motivators of dam building).

The other factor is that the power achieved by the station will roughly go with the volume of water and head. So if you want a lot of power you end up needing huge pipes.

[Intermernet]

There are probably better examples, but I love the Australian Snowy Mountains Hydro Scheme as an example of huge pipes used for penstock.

http://farm5.staticflickr.com/4061/4391493249_8332c6f014_o.j...