A study of the application of an induction generator (IG) in power systems is presented in this paper, The Electromagnetic: Transients Program (EMTP) is used to investigate the self-excitation phenomenon and the dynamic behaviour of the induction generator, resulting from the grid disconnection, The results demonstrate that, if the amount of the external reactive power source is sufficient to insure self-excitation of the induction generator, high and abnormal overvoltages occur which can be dangerous for the insulation integrity of the Non Utility Generator (NUG) equipment, the local load and, even worse, for the maintenance personnel.