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Permanent magnet AC generators are robust, inexpensive, and efficient compared to wound-field synchronous generators with brushless exciters. Their application in variable-speed applications is made difficult by the variation of the stator voltage with shaft speed. This paper presents the use of stator-side reactive power injection as a means of regulating the stator voltage. Design-oriented analysis of machine performance for this mode of operation identifies an appropriate level of machine saliency that enables excellent terminal voltage regulation over a specified speed and load range, while minimizing stator current requirements. This paper demonstrates that the incorporation of saliency into the permanent magnet generator can significantly reduce the size of the reactive current source that is required to regulate the stator voltage during operation over a wide range of speeds and loads.