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The above illustration of a TN-S Earthing system shows one shared connection to earth between neutral and protective Earth.

Assuming a short circuit occurred, in the brief second before detected by a circuit breaker, I would think that the current would flow back to its source, and not into the earth, as current must flow in a loop (and current cannot flow in both directions simultaneously).

In reality, are there multiple independent connections to earth back at the generator/transformer, which would provide the necessary loop?

If not, what is the purpose of the physical connection to earth in such a configuration?

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It all depends on where the short occurs.

If one of the three phases (A, B or C) shorts to the equipment frame, then the circuit will be made through the PE conductor. No current flows to earth there.

However, it's also possible for a phase to short to something that is itself grounded, but not connected to any PE conductor. That thing might be a water pipe, or even a person. In that case the ground itself forms part of the return path to the transformer's earth.

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Three phases systems do not need to be grounded in some cases, in the case of 1 phase loads a ground can have an advantage.

First, the system voltage with respect to ground is fixed by the phase-to-neutral winding voltage. Because parts of the power system, such as equipment frames, are grounded, and the rest of the environment essentially is at ground potential also, this has big implications for the system. It means that the line-to-ground insulation level of equipment need only be as large as the phase-to-neutral voltage, which is 57.7% of the phase-to-phase voltage.

It also means that the system is less susceptible to phase-to-ground voltage transients. Second, the system is suitable for supplying line-to-neutral loads. The operation of a single-phase load connected between one phase and neutral will be the same on any phase since the phase voltage magnitudes are equal. This system arrangement is very common, both at the utilization level as 480 Y/277 V and 208 Y/120 V, and also on most utility distribution systems.

Source: http://static.schneider-electric.us/assets/consultingengineer/appguidedocs/section6_0307.pdf

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Step - up transformer closest to generator mostly have star connection on secondary ,mostly with grounded neutral point. So that is connection to source, through ground (in short circuit). In normal operation, three phase system does not need to have N and PE unless you need phase voltage.

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