The effect of electrical steel degradation due to punching on the performance of fractional-kW electrical machines in terms of torque and iron losses is investigated. The local degradation of the steel is considered in the BH curve and iron losses model by continuous variation of the magnetic proprieties as a function of the distance from the cut edges. The newly introduced parameters are identified by fitting the proposed relations for the BH curve and iron losses with measured values obtained via standard Epstein frame test. The position-dependent BH curve is incorporated into magnetostatic FE equations. Then, the performance of two different synchronous machines, i.e. with permanent magnets and reluctance rotor, is analyzed by means of FE simulations. Considering punching, the average torque decreases by 0.5-2 %, while the iron losses can undergo an increase of 30-40 %. Moreover, in order to check the validity of the model, the magnetic friction torque of two permanent-magnet motors, one with an annealed stator and the other one with a non-annealed stator, is measured and compared with calculated values based on the FE model
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