This paper investigates the performance of a self-excited reluctance generating system by using active and reactive power balances. The FEA simulation results are employed to account for both saturation and cross magnetizing effect of d-and q- axis inductances. The procedure to determine the operating point with this method is proposed, and the influence of generator parameters, including stator resistance and inductances, are also investigated. Experiments are carried out at no-load and resistive load conditions separately, verifying the predicted values. In addition, the active and reactive power balance curves are also used to determine whether the generating system works at certain conditions. If there are no crossing points between the two curves, the generator is not able to generate. At last, it is shown that the capacitors and load resistors can be selected based on the power and reactive balances, achieving both high output power and high power factor.