An air gap optimization study of a 3-kW axial flux three-phase permanent magnet generator has been performed. The machine has two rotors sandwiching a stator with 12 separated laminated cores under an innovative flux morphology circulating over the back-iron components. The rotor component has 16 rare earth magnets with an innovative self-cooling blade structure. According to the air gap parametric magnetostatic analyses under the finite element method (FEM) between the range of 0.8 and 7 mm, the spatial magnetic flux distribution and cogging torque values have been determined. Besides, following the magnetostatic analyses, time-dependent FEM simulations over the generated voltage and power values have been studied in detail. Then, after the implementation of the designed machine, the experiments have been performed for various air gap values. The generated power is observed to be dependent on the air gap, the efficiency is measured as 85%, and power density is measured as 111.7 kW/m(3), which is a promising value compared to the literature. A scaling effect study is performed as functions of air gap and rotor speed for the first time to our knowledge. The maximum cogging torque is measured as 3.12 Nm. The other superiority of the present prototype is its low total harmonic distortion value within 2%; thereby, it generates nearly an ideal sinusoidal waveform. Consequently, the novel machine is recommended for both off-grid and on-grid operations with its low harmonic distortion and high efficiency.