What is wrong with my generator?
There is probably nothing wrong. It could be one of the following issues.
A generator when overloaded will see a reduction in speed as the maximum fuel limit is reached. In this instance you should check your load and reduce it to it is within range. See also what happens when i apply load to a diesel engine.
Blocked Fuel / Air Filters
if your engine has blocked air or fuel filters, it won't be able to get full power. Combustion in the cylinders will be poor due to lack of oxygen or fuel to maintain the rated speed. This may also be accompanied by black smoke.
Generator Governor Droop
For engines fitted with a mechanical governor, they will have inbuild droop. This means as the load increases, the engine speed will fall. In this instance the off load speed should be set 3-5% higher to allow the rated speed to be achieved at full load.
See Droop vs Isochronous governing for more information.