As far as I know, this is not true. On a small scale wind has been profitable for a long time. In The Netherlands, small scale commercial wind turbines go back a long time. As far as I know there were no subsidies back then.
Economically viable because the costs of the land used behind the dams were not nearly as high. Today most of the good places for hydro are already taken, and we have far more concern for the environmental impacts. There is still room for adding hydro, but it isn't as easy as in the past.
Hydro is being phased out in the USA because it destroys river/watershed biomes. You won't see any significant hydro being done in the USA for quite a while as the environmental groups won't allow it and it will be locked up in court for decades.
