How does the formation of a covalent bond lower the potential energy of the two atoms in the bond?

Answer is: the lowest potential energy occurs when the two nuclei are an optimum distance apart from one another so that they don't repel each other.
Covalent bond length is the internuclear distance at which the lowest potential energy is achieved. Lower potential energy increases the stability of the system. 

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Firstly, the water in the dams hold gravitational potential energy as they are above ground level. the gravitational potential energy is then transferred to kinetic energy as it falls, spinning the turbinethe turbine then spins the generator, which is a large magnet surrounded by metal coils. by doing this, the generator generates electricity. in this action, the energy transfer taken place is kinetic to electric energy