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This paper presents the analysis, design and simulation or wind-powered self-excited induction generator (SEIG). The three-phase SEIG is driven by a variable-speed prime mover (VSPM) such as a wind turbine for the clean alternative renewable energy in rural areas. The VSPM is modeled by as a variable-speed separately-excited DC motor to simulate to the wind turbine. Also, the paper describes the dynamic performance of the VSPM and SEIG which includes prime mover torque, rotor speed, rotor frequency, and d-q axes dynamic stator voltages, As well as the electromagnetic torque and the magnetizing inductance of the SEIG. During voltage build up of the SEIG, the variation of the magnetizing inductance is considered. The input of wind powered SEIG is the wind speed which is not controllable. The wind speed could be, constant, or varying in a form of pulses, sinusoidal, or step change. Actually wind speed almost has a random variation according to the wind turbine location and its atmospheric conditions, but they can be set to operate within a given variation of speed. In this paper, the dynamic performance of the SEIG during loading instant is considered. The value of the excitation capacitance of the SEIG is also considered. The simulation results are given using Matlab7/Simulink toolbox program.