The wind energy conversion system considered in this thesis is based on a vertical axis wind turbine with a cable wound direct drive PM generator. Diode rectifiers are used to connect several such units to a single DC-bus and a single inverter controls the power flow from the DC-bus to a utility grid. This work considers the described system from a generator perspective i.e. the turbine is primarily seen as a torque and the inverter is seen as a controlled load. A 12 kW VAWT prototype with a single turbine has been constructed within the project. The power coefficient of this turbine has been measured when the turbine is operated at various tip speed ratios. This measurement determines both how much energy the turbine can convert in a given wind and at what speed the turbine should be operated in order to maximise the energy capture. The turbine torque variation during the revolution of the turbine has also been studied. A PM generator prototype has been constructed in order to study power loss in the stator core at low electrical frequencies. Heat exchange between the stator and the air-gap between the stator and the rotor has been studied. Heat exchange between the stator and the air-gap is increased by turbulence caused by the rotor. The generator was also used in a demonstration of a DC-grid where two diode rectified PM generators supplied power to a single DC load.  An initial study of an inverter suitable for grid connection of the 12 kW PM generator has been performed. Several turbine control strategies are evaluated in simulations. The control strategies only require the parameter "turbine speed" to determine the optimal system load.