The interest in technologies related to microgeneration has increased over the last decade. Hydro, wind and solar power represent some of the technologies which had significant improvement. Among these technologies, micro hydro power stations with self-excited induction generators (IG) became an excellent choice for limited power generation in isolated areas, due basically to its robustness and low cost, compared to synchronous machine. This paper describes the controllers for micro hydro power stations for island operation based on nonlinear model of hydraulic turbine with a self-excited induction generators. Frequency control is obtained by a speed governor applied to the turbine feed system while constant voltage control is reached through reactive power control using a voltage source inverter (VSI). In order to reach effective frequency control, it is proposed the use of a motor flux estimation algorithm to obtain the measurement of instantaneous rotor speed without using a mechanical sensor applied on his shaft resulting in inherent cost reduction. Simulation results are given and they illustrate the transient behavior due step changes in load and frequency reference setting point.