APFC in Generator

A generator that is running and not connected to anything will have a power factor of zero, and attaching capacitors will make no difference. So, no, there is no point in installing them there.

The best place for capacitors is at the load end of the supply cable. The amount needed depends upon the size and the reactance of the load, which is why capacitor banks are normally switched automatically within the supplier's power factor correction equipment enclosure.

Think of them as making a tuned circuit with the load that resonates at the supply frequency, thereby reducing the cable current.

I have never heard of it being done that way.