Mr Shepard’s flying generator looks like a cross between a kite and a helicopter. It has four rotors at the points of an H-shaped frame that is tethered to the ground by a long cable. The rotors act like the surface of a kite, providing the lift needed to keep the platform in the air. As they do so, they also turn dynamos that generate electricity. This power is transmitted to the ground through aluminium cables. Should there be a lull in the wind, the dynamos can be used in reverse as electric motors, to keep the generator airborne.Here's another interesting proposal:
Meanwhile, Wubbo Ockels of the Delft University of Technology in the Netherlands has been developing another approach to airborne wind generation at lower altitude, with backing from Royal Dutch Shell and Nederlandse Gasunie, a natural-gas company. Dr Ockels’s idea is that a kite (without rotor blades) be launched from a ground station, turning a generator as it rises to an altitude of several hundred metres. When it reaches its full height, it alters its shape to catch less wind, and can thus be reeled back in using much less power than it produced when it was being paid out.Link
An arrangement of two or more of these kites could act together to produce a steady supply of power. When one kite was being released, part of the electricity produced would reel the other kite back in, and vice versa. The whole system would thus remain in surplus, and if well designed could deliver a constant current. This system has the advantage that it requires only simple parts—generators, kites and cables—and should thus be much cheaper to build than a conventional turbine.