Faults involving ground produce high fault current magnitude especially when the transformer(s) neutral is solidly grounded. The neutral ground circuit in the transformer provides the return path for the fault currents. To limit this current, impedance – either in the form of a reactor or a resistor – is installed in the neutral circuit. See the figure below.
The table below lists the differences between utilizing a resistor or reactor as the impedance in the transformer neutral circuit.
Image courtesy: Postglover
Image courtesy: Trench
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More on transient over-voltages:
Transient over-voltages are produced by arcing faults, not surges. The over-voltage occurs when the arc strikes due to a line-to-ground fault and charges the system capacitive reactance. When the arc momentarily extinguishes, the charge needs to dissipate. When the neutral ground resistor is used as the impedance, its resistance is usually less than the capacitive reactance, thereby allowing the voltage to discharge. However, when the reactor is used and when its reactive impedance is high (to limit ground fault current to less than 25% of the three phase current), the voltage cannot discharge. As the arc re-fires, the charge can continually build, thus creating the over-voltage.
If it is desired to limit the fault current to a really low magnitude using the actual resistance then a resistor is recommended. On the other hand, if several thousand amps of fault current is permissible in the system then the reactor is recommended. In the either case, the reactor can be an economical solution. Keep in mind, we are talking about shunt air core reactor in the transformer neutral for current limiting purpose. Series reactors, however, are expensive. The price of any neutral ground impedance device increases with the increase in the continuous current rating (for reactors), impedance rating, and time rating.