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The power of wind turbine is steadily increasing and nowadays machine powers up to 10-20 MW and their possible realizations are discussed. At the moment wind turbines are available up to 8 MW powers. The biggest generators are planned to be installed in offshore applications. More powerful and reliable generators must be designed to be used together with them. Therefore, direct drives are considered. The development of compact high-power direct drive wind turbine generators necessitates design of more effective cooling system to ensure their safe operation. The focus of this paper is in the steady-state thermal analysis of 8 MW DD PMS generator with direct water cooling of the stator winding based on Lumped-Parameter Network (LPN) and Finite Element Analysis (FEA). Thermal design of the generator based Computational Fluid Dynamics (CFD) is also presented here to evaluate the influence of passive air cooling on the rotor.