I don't understand it either. Am assuming we're both looking at the wikipedia article, unless you have another source/are going from something else:
https://en.wikipedia.org/wiki/Electrodynamic_tether#Tethers_...> When the tether intersects the planet's magnetic field, it generates a current, and thereby converts some of the orbiting body's kinetic energy to electrical energy. Functionally, electrons flow from the space plasma into the conductive tether, are passed through a resistive load in a control unit and are emitted into the space plasma by an electron emitter as free electrons. As a result of this process, an electrodynamic force acts on the tether and attached object, slowing their orbital motion. In a loose sense, the process can be likened to a conventional windmill- the drag force of a resistive medium (air or, in this case, the magnetosphere) is used to convert the kinetic energy of relative motion (wind, or the satellite's momentum) into electricity. In principle, compact high-current tether power generators are possible and, with basic hardware, tens, hundreds, and thousands of kilowatts appears to be attainable.
Maybe cosmic radiation interacting with the magnetosphere is adding to the "wind" in the analogy; not sure. Agree that the explanation makes it sound like you'd basically just be turning launch energy into electricity, which doesn't sound useful for generating power to send back to earth.
Nudging space rocks into orbit to generate electricity is a cool sounding idea. I've heard similar proposals for space mining if and when it becomes a thing just to make transporting the material a lot easier. Not sure how plausible that is either.
Regardless of what form it takes, I really hope we get some serious and practical space infrastructure at some point. I think having a practical reason to go into space beyond just gathering astronomical data and doing experiments will help keep space programs from stagnating. Plus it'd be super cool.