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Based on the complete model of the plant, a sliding-mode stabilizing controller for synchronous generators is designed. The block control approach is used in order to derive a nonlinear sliding surface, on which the mechanical dynamics are linearized. This combined approach enables us to compensate the inherent nonlinearities of the generator and to reject high-level external disturbances. A nonlinear observer is designed for estimation of the rotor fluxes and mechanical torque.