Your friend is wrong - what he is proposing is a perpetual motion machine, so you know that it can't possibly work. The reason it can't work is not that "power is constant" (whatever you were trying to convey), but rather that the power required to turn the shaft of the generator is greater than the electrical power that it produces - energy can't be created out of nothing, and all mechanisms have some amount of loss inherent in them. Then that electrical power drives the escalator motor, but the mechanical power available from the shaft of the motor to move the escalator is less than the electrical power that goes into it. Now add the friction of the escalator mechanism, which robs more power, and the energy required whenever a person steps on the escalator to go up to the next floor. You can see that the energy lost in the system makes it impossible to be self-sustaining; some amount of outside energy is required to make this work. When your friend takes thermodynamics as part of his ME curriculum he'll get a better idea of why his suggestion is impossible.
By the way - if an esacaltor or elevator could be made to operate for free this way, don't you think the escalator manufacturers would be all over this? Imagine how they could increase sales and profits if they could market an energy-free machine.
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