Why start shunt generator with output open

A shunt generator is self-excited: its field winding is connected across its own armature, so the field current comes from the voltage the machine itself produces.

Voltage build-up: residual flux produces a small emf $\to$ this drives a small field current through $R_{sh}$ $\to$ the field current strengthens the flux $\to$ the emf rises. This continues until the field-resistance line meets the open-circuit characteristic.

Reasons for starting on open circuit:

1. With a load connected, the load draws current from the small initial voltage, and the armature drop $I_aR_a$ reduces the terminal voltage further. The field current $I_{sh} = V/R_{sh}$ therefore stays too small to raise the flux.
2. A low-resistance load across the terminals effectively short-circuits the field, so the machine never builds up (the voltage collapses to the residual value).
3. The load current also causes armature reaction, which weakens the small flux even further.

With the output terminals open, the whole armature current goes into the field, so the voltage builds up quickly to its rated value. The load is switched on afterwards.