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The need to decentralize power generation and decarbonize the earth in order to have a sustainable global economy are the major reasons for the development of this paper. Considering the flaws of grid-connected power system, the autonomous system becomes a better alternative in rural and isolated areas. Analysis of stand-alone single-phase Asynchronous generator based on dq model in a stationary reference frame is presented. Asynchronous generator does not have the capability to produce reactive power necessary for excitation and this must be provided by external means. Capacitive method has been considered in this paper due to its simplicity and its economic viability. The effects of magnetic saturation in the airgap has been considered by using the nonlinear relationship between the magnetizing inductance and the magnetizing current of the machine. Under this approach, the mutual inductance varies continuously. The results have shown that steady state condition of the generated voltage is not fixed but depends on the suitable combination of excitation capacitance and the rotor speed.