An induction Generator is an induction machine which is run above its synchronous speed. In this condition, the induction generator draws reactive power from the lines and supplies active power.
The induction generator can be made self-excited by connecting a capacitor bank in parallel to the load. The capacitor supplies the required reactive power while the load draws the active power.
This is known as the standalone induction generator.
The capacitor bank provides the reactive power requirements of both the load and the induction generator.
Standalone induction generators are used in remote locations and connected to small water turbines or wind mills.