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This paper presents the design, manufacture and performance results of a low cost permanent magnet generator for small wind application. PM generators are able to achieve high efficiency compared with other generator types, but they also cost more than other generators. To make PM generators a low cost option, the generator configuration and materials have to be carefully selected. The paper highlights why the selected generator is designed, the choices made and the effect of used materials and manufacturing process on efficiency and energy yield. Results show that the annual energy yield of the system with prototype axial flux PM generator is comparable to that of commercially available systems.