The correct option is D Potential
In a dam filled with water up to a certain level, there is the weight of water acting downwards (i.e mass×g) and also the water is at a certain height h. Hence, recalling the formula for potential energy which is 'mgh', it is evident that it has potential energy stored in it. When the dam is opened and the water is allowed to fall out, this potential energy gets converted to kinetic energy according to the law of conservation of energy.