A dynamo generates electricity by using a magnetic field to imbue wires with an electric current. According to the Edison Tech Center, this process generates a direct current that can then be fed down the wires to an alternator for conversion to an alternating current; these alternators are sometimes known as generators.
Generating electrical power from a dynamo starts with a mechanical power source, such as a turbine. According to the Edison Tech Center, this turbine can be driven by steam, falling water, gas pressure or wind. The spinning turbine is connected to the generator via a freely rotating shaft that transfers rotary power to the dynamo.
At the heart of a dynamo's action is a single magnet rotating within the field generated by another magnet. The stationary magnet is known as the stator, and it generates a powerful field through which the mobile magnet can be rotated. The movement of this second magnet distorts the stationary field and generates an electric charge. Moving a wire back and forth inside this field generates an electric current that can be sent down the wires, as reported by the Edison Tech Center. These magnets usually aren't natural or permanent magnets, but electrically charged copper wires, which are easier to control.