This paper presents a transients of an cage induction generator connected to the power grid as it is in small hydropower station. In such power station, there is no control of prime mover speed. The no load speed of water turbine and then induction generator depends on reservoir water level and water pipe diameter. The transient state during connection of the cage induction generator to the power grid is discussed in dependence on generator initial slip. The negative impact of connected cage induction generator on the line is described. The transient current to grid connected generator is very high and produces transient overload of the supply system. The reduction of that negative influence is proposed by using a power electronics converter which works as reactive power compensator. The power electronic compensator is used in steady state to reduce demand of the grid reactive power needed by induction generator and in transients to reduce surge current. The computer model of the generation system, made form induction generator and power electronic compensator, has been designed and used to preliminary verification. Moreover a laboratory generation system has been built and tested.
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