A compact and lightweight electric generator for portable power applications employs a new engine design and integration approach for reducing engine, generator, and starter weight. A unique flywheel alternator/starter configuration that generates electrical power, rotates the engine for starting, provides inertia for smooth engine operation, pressurized air for cooling, and inertia for the alternator. An engine cowling provides rotating component protection, a fan shroud mechanism, cooling air ducts, and a cooling mechanism for handling large quantities of heat produced by rectified power conversion. An electrical hook up that allows the generator to provide transient surge capacity for starting inductive loads, or improved load leveling and fuel efficiency.