Imagine a Stanford torus rotating with 1 rpm so that centripetal/reactive centrifugal acceleration provides about 1.0g of artificial gravitational acceleration inside the ring. The picture below shows a Stanford torus in a cutaway view.
The rotating torus has a specific rotational energy (let's say 100 J). A mass of 1 kg is located 1 m above the ground inside the torus.
Step 1:
The mass is dropped. The torus' moment of inertia increases, its angular velocity decreases. The rotational energy of the torus does not change.
Rotational energy of the torus after step 1: 100 J.
Step 2:
¾ of the torus' rotational energy is converted into electric energy. We assume no heat losses in the process. The electric energy is temporarily stored.
Rotational energy of the torus after step 2: 25 J.
Stored electric energy: 75 J.
Step 3:
The mass is lifted again. The torus' moment of inertia decreases, its angular velocity increases. The rotational energy of the torus does not change.
Rotational energy of the torus after step 3: 25 J.
Stored electric energy: 75 J.
Step 4:
The stored electric energy is converted into rotational energy of the torus. Again, we assume no heat losses in the process.
Rotational energy of the torus after step 4: 100 J.
Stored electric energy: 0 J.
The sum of rotational energy and electric energy is equal in all steps. The critical actions are accelerating/decelerating the torus. When rotational energy is invested in or taken out of the torus, not only does the rotational energy of the torus change but also the potential energies of the masses inside the torus. In step 2 potential energy "disappears" and in step 4 potential energy is "created". Energy is gained in this example since the mass is lifted under less acceleration and is dropped when acceleration is greater. But the process can be done the other way around.
This would indicate a contradiction of classical mechanics and energy conservation. Do you see any mistakes or something that I missed?