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This is the simple explanation. A generator works because the magnets are exciting the electrons in the coil. The magnet moving back and forth creates alternating current (AC). That is the electrons are moving back and forth through the coils and the LED (light emitting diode). The excited electrons passing through the LED lights the LED.
For more comprehensive information go to
*Jonathan Hare at www.creative-science.org.uk is where we learned about the shake-a-can.
*We used 30 guage magnet wire
*Neodymium magnets work best but we were able to get the light to turn on with ceramic magnets (much cheaper).
Our steps also available at
More info and where we got the idea is at - http://www.creative-science.org.uk/gensimple1.html