In order to perform maximum power point tracking control of wind generation system, it is necessary to drive windmill at an optimal rotor speed. For that purpose, a rotor position and a wind velocity sensors become indispensable. However, from the aspect of reliability and increase in cost, rotor position sensor and wind velocity sensor are not usually preferred. Hence, wind velocity and position sensorless operating method for wind generation system using observer is proposed in this paper. Moreover, improving the efficiency of the permanent magnet synchronous generator is also performed by optimizing d-axis current using the Powell method. (c) 2005 Elsevier Ltd. All rights reserved.