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I read this on another site: "In a properly designed circuit, if a fault were to occur on the 120-volt outlet between the hot-wire and the ground, the current will flow through ground wire back to the main panel, where it will move to the neutral wire via the neutral-to-ground bond, up to the utility transformer, back down the hot wire to the circuit breaker, tripping the breaker."

So now I'm thinking why have a ground rod at all if it goes to the neutral wire at the panel and not the ground rod.

This question is not specific to a fault condition. If the neutral and ground are tied together at the panel what prevents current from the neutral wire flowing to earth through the ground rod?

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    \$\begingroup\$ The ground rod insures that the voltage is referenced to earth, which is generally a good thing. It just makes sure the neutral wire does not end up having high potential with respect to ground. Also, sometimes fault currents may travel to the ground rod through other paths (in which case, RCD or GFI may detect the fault and trip). \$\endgroup\$ – mkeith Sep 11 '17 at 5:05
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    \$\begingroup\$ outside earth ground on neutral reduces risk of lightning voltage entering the home with distributed sparkgap protection on lines and smaller gaps in meters for 6kV \$\endgroup\$ – Tony Stewart Sunnyskyguy EE75 Sep 11 '17 at 5:20
  • \$\begingroup\$ See my answer to Why don't we use neutral wire for to ground devices and warth wire for closing. \$\endgroup\$ – Transistor Sep 11 '17 at 5:25
  • \$\begingroup\$ See also my answer to railway coach wiring. \$\endgroup\$ – Transistor Sep 11 '17 at 5:29
  • \$\begingroup\$ @Transistor, the OP seems to understand the importance of having a dedicated protective ground, and why it should be bonded to neutral at the service entrance. The question seems to be about why the protective ground needs to be earthed. \$\endgroup\$ – mkeith Sep 11 '17 at 5:43
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Its for your protection. Imagine that the fault is from hot to ground and the ground is the outside of a metal Kettle. The ground rod ensures that the outside of the kettle is at the same potential as the ground under your feet and hence at the same potential as you. The result is that you are protected against shock until the breaker or GFI trips.

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  • \$\begingroup\$ Ok. I get that. Do you still require a ground rod at the transformer? In the event of a fault it seems the circuit is not being completed via ground but via the neutral or return wire. \$\endgroup\$ – user1897830 Sep 11 '17 at 8:16
  • \$\begingroup\$ There will be a ground rod at the transformer neutral is connected to ground at the supply source. Transistor's answer referenced above is excellent and worth studying. \$\endgroup\$ – RoyC Sep 11 '17 at 8:39

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