Currently Water Mills produce at best 0.25EU per tick, then loose at least 10% of that on the first cable block. It is required to directly link water mills with a collector or transformer as otherwise too much EU is lost. This in general increases the cost of a single water mill by the Batboxes you have to add, and therefore beyond the cost of wind or solar generators, while producing a lot less EU and building a water works tower is way more complicated.
I think 1 EU / mill (unmanned) is the right amount. This would make them as efficient/material as wind mills (~2EU if placed correctly) but with a guaranteed output. The drawback is the difficulty in building a proper water mill tower, which is way more complicated than placing wind or solar generators, but then produces a more reliable output.
I think the material cost can stay the same, as you need a Batbox or MV-converter every 3-4 water mills if you build a tower of them to not loose too much EU on the cable.