Terminal voltage of a synchronous generator drops with an increase in the generator current because of the large inductance in the generator, called synchronous reactance. This paper proposes the use of an active series compensation device named magnetic energy recovery switch (MERS) for improving engine generator performance. The MERS can compensate for the voltage drop caused by the synchronous reactance and it can control the load voltage more quickly than the auto voltage regulator can control the excitation current. Thus, the MERS can improve the generator efficiency and transient over power characteristics.