Electromagnetism Induced Current in a Generator. The effect of inducing a current in a coil by moving a magnet inside it is used for the large scale generation of electricity in power stations. There are two types of generator or dynamo. Both turn rotational energy into electrical energy. 1. One type involves rotating a coil inside a magnet. 2. The other type involves rotating a magnet inside a coil (like a dynamo found on a bicycle). Both types produce alternating current. It is possible to make a generator without a permanent magnet. The generator used on cars (called an alternator) uses an inner set of coils to make an electromagnet which turns inside an outer set of coils.