Vertical hydrokinetic turbines in an array that extends from one side of a channel or river to the other side of it experience a fixed blockage effect as a result of the adjacent turbines and a variable free-surface effect due to water level changes above turbines. For tidal applications, the water level above turbine blades changes continuously throughout the day; for river applications, the water level changes on a seasonal basis. In this study, a vertical turbine operating in an array of turbines with one diameter lateral distance between two adjacent turbines is modeled. The model turbine is tested in a water tunnel at various water levels. Results show that the water level reduction improves the power coefficient of the turbine when the turbine is fully submerged—the power coefficient increases due to the free-surface effect, with trends in agreement with the one-dimensional actuator-disc flow theory. However, the power coefficient decreases significantly when the turbine is only partially submerged. In this particular condition, the entrained air into the water by turbine blades separates the water from the blade surface. A high-speed camera visualizes the flow separation while a transducer measures the instantaneous torque of the turbine.