Unfortuantely, remote mains power is not cheap. The typical setup goes: DC power source -> battery bank -> inverter -> mains thing you want to power. Since you're wanting to power ballasts for the lights I assume, you'll need a hefty inverter which can handle the inductive load of ballasts. Try to use electronic ones as they are more resistive and won't mess with you inverter's power factor.
Regardless, a 2kw inverter will run you about £300-400. Add to this the cost of a lead-acid battery bank and it's not a cheap system... I'm guessing the petrol generator you have is one of the little ones in a frame run by a little engine, like this
img]http://www.germes-online.com/direct/dbimage/50282787/WT_Series_Air_Cooled_Diesel_Generator_Set.jpg[/img]
That isn't suitable for continuous running due to the high speed of the engine and short service intervals...most require an oil change every 100-200 hours. It won't last longer than a couple of weeks non-stop running without dieing...a typical store-bought genset has a 2-pole alternator, which needs to be spun at 3000 rpm for 50hz. You also cannot remove the mains alternator from the genset and spin it with a simple water wheel without complex phase/frequency correction electronics as it needs to be turned at pretty much exactly 3000 rpm...or else it won't be 50hz output. Voltage won't waver due to the regulator modulating power to the field rotor (the spinning electromagnet inside), but the changing frequency can burn out transformers and induction motors. Note that spinning it significantly slower will mean no power at all as the energiser rotor or energising winding will not be able to supply the main rotor with juice.
If you do want to make power from the water wheel, you'll need a permanent magnet generator - like a large DC motor - or a low-speed permanent magnet alternator with many poles coupled with a recifier to convert the multiple phases to DC. People build these for wind turbines using neodymium magnets, hand-wound stator coils and buttloads of epoxy. Either of these things, once passed through voltage regulation, will be suitable to charge a battery bank. Large permanent magnet DC motors only need regulation, and can be found inside old tape drives and small electric scooters. And since it is rectified, spinning that alternator at different speeds doesn't matter.
If you don't want to splash out on an expensive inverter, the best thing to do is keep it all DC and use DC lights and stuff. Using a battery bank will give many different voltages in multiples of 12, so 24v truck stuff can be powered.
Finally...what exactly do you want to power? How many lights? What type?
DIY remote electricity
