AC Generator topics
As the generator is spun by the energy source ( water flow ) the sides of the rectangle wrapped around the central core move through the fields lines. Charges in the wires respond to F = IlB sinθ and RHScrew Rule and are forced to one of the brushes contacting the circles on the shaft.
A PD between the outputs ( Emf = vlB sinθ ) will exist and will change in time as the system rotates ( ie θ varies in time ). The result is an AC output.