Environmental and water quality degradation mostly affects the aquatic diversity. How hydropower generation affects aquatic diversity except fish and phytoplankton
These are generalities that could vary with circumstances, type, location, management.
Affects to water timing, frequency of flow change, peak flow, sediment, temperature, oxygen, aquatic organism passage, channel substrate are some changes that can affect or alter habitats. In one coastal example, I found that the low flow releases in water were not sufficient and allowed increased tidal influence into normally freshwater tributary areas. Channel morphology downstream of dams may change due to clean water reseases, lack of 1-2 year bankfull flow releases to maintain channel, eroding or abandoned bars, channel degradation, etc. Upstream of dams, gradient changes tends to locally increase fine sediment accumulation and associated impacts if pollutants are associated with sediments. Case by case analysis is appropriate, as in some situations, releases of stored water helps to keep streams flowing, cool warm waters, reduce flooding severity.
I forgot to mention, in USA there is the Federal Energy Regulatory Commission (FERC), and each project is evaluated extensively for impacts, so searching on various projects may offer added ideas and analyses undertaken to address aquatic diversity effects.