No magic exists in this setting beyond what is explicitly described in this quesiton. The setting is vaguely European medieval. The question centers around a town large enough to support a nobleman complete with his keep. The town and the immediate surrounding area have a variety of industries, most notably farming, logging, mining (iron ores), and a variety of local craftsmen.
A carpenter one day discovered that if he built a water wheel and mounted it horizontal it would turn, building up speed. Eventually it would reach somewhat more momentum than an aggressive stream would produce. A smaller water wheel with smaller paddles produces less force, and poorly constructed water wheels will eventually break as though actually being pressed on by a force of water. In fact, for nearly all intents and purposes, the wheels act like they are being pushed by an invisible stream of water.
What exactly constitutes a "water wheel" isn't clear, but if through experimentation the townsfolk determine that any wheel that looks like a water wheel and was intentionally crafted in the style of one seems to possess this effect. The less horizontal the wheel is, the less the effect is present. The further the wheel is away from the town, the less the effect is (at about 50 miles out from town the effect is entirely gone).
Effectively this creates a means of getting mechanical power like water generated power of that time, but be largely unburdened where one is getting the power (no need to be near a stream).
What effects would this new energy source have on local industry in the relative short term (<30 years)?