eliminating dependency
It came, out of the box new when I bought it more than 10 years ago, with that ground loop wire disconnected and remains that way right now. Believe it or not, I only recently (successfully) hooked the automatic transfer switch up (yeah, I'm a little slow). I did some separate, direct, temporary wiring during the few times I really needed the generator until then, making sure nothing was still connected to the grid.
The generator served us well (cobbled like that) a few years ago when an ice storm left everyone here powerless (no heat or water or electricity, etc) for over a week. Bad things happen when it is that cold and you have no juice or heat or water for that long. Again in '08, the Great Flood wreaked havoc with energy supplies for a long time. But other than that schematic of the internals of the generator, there were no instructions for installing the automatic t-switch, and with the complex self-starting monitoring system and automatic switching, I felt a little overwhelmed figuring it out. I tried, and thought I had it right, but couldn't quite get it to all work together.
Motivated again after last week's power outage due to a storm, I renewed my efforts and voila': I found where a wire had not been tightened inside it's lug in the generator causing it to only produce 120v instead of 240v. I had everything hooked right all along after all, but some assembly worker had neglected to tighten one screw. Now, everything is hooked up, tightened, and works great!
The setup constantly monitors utility power. In the event of a black or brown out, it automatically fires the unit up, warms it up a little, checks that all is right with the genny output, motor, etc, and switches to gen power. When it senses proper utility power has been restored, it switches back to the utility, runs a short cool-down, and shuts the unit off. It charges and maintains its own battery at all times, and fires itself up to "exercise" on a regular basis. Pretty cool now that it all works right.
My inclination is to let the house system do the grounding since the generator is a part of it (leave that loop disconnected like it came). I do want to sink a separate ground rod and ground the genny cabinet, though. Why not? It has a ground lug welded on and all it takes is copper rod and a little wire.
I just don't know if I should tie the internal generator neutral to that ground using the optional loop. I think not since the genny neutral is always tied to the utility/house neutral, which has it own ground circuit. The breakers and transfer switch only affect the hot leads.
It's a cool system, Ken, and offers peace of mind. When we first bought this rural house, this area had frequent power supply problems due to age and overbuilding that had not been kept up with by the utility company. Mostly just a couple of hours, but you never knew... With the massive construction and growth boom of the past 10 years around here, and an updated grid, power outages have become less of a problem, but I still have the area's largest cottonwood tree next to which the utility company put the transformer pole for this neighborhood. That tree is giant water-filled lightning rod, and that transformer has been blown up at least 4 times in the past several years.
It was a fairly expensive investment, and one you seldom need. But when the power goes out for extended periods and it is sub-zero weather, or it is hot and you cannot keep your fridge and freezer running, or you just don't like sitting around in the dark, it is great to have a generator. In retrospect, a smaller, simpler setup would get the job done. Since my boys were very young then, and I was away a lot, I wanted an automatic system so my wife wouldn't have to do anything and even if we were all gone for the weekend or a week, it would do it's job. During the Ice Storm outage, I parked my camper at my neighbor's house and powered her essentials with its 5500w generator. Good thing, too, for some reason, it took the overworked utility company a week extra to get her house back online.
Our house was heated with LP when we bought it, and I have a 1000 gallon tank out back. Shortly after we bought the place, the utility company brought natural gas through this area, which was much cheaper, so we switched. But I now have 1000 gallons of LP dedicated to run that generator and I plan to also install an LP fireplace/heater as an auxillary heat source and for the asthetics. I have a small woodbuning stove to hook up this summer as I finish some remodeling, too. that will give me 4 different sources of heat: Electric space heaters (AC power is also needed for the furnace of course), wood heat, natural gas (for the furnace), and LP gas (for the fireplace and generator).
I have my own well, sunk less than 10 years ago to the very deep 2nd aquifer, and I have my own septic system. With that generator and LP supply, I can go off the grid for months if I had to and never miss a beat except for my internet connection. And I'm strongly considering a satellite or fiber-optic system for Internet and cable TV since the local cable provider is getting outrageously expensive.