Most relays watch one current and trip when it gets too big. A differential relay watches two currents — the current entering a protected apparatus and the current leaving it — and trips when they stop matching. A healthy apparatus passes the same current in and out; a fault inside it breaks that balance. This post explains the differential principle and the classic Merz-Price circulating-current scheme that puts it into practice.
The differential principle
The relay operates on the phasor difference between the currents at the two ends of the protected zone:
Idiff = |I1 − I2|
If this difference exceeds a set threshold, the relay trips. Under healthy conditions the two currents are equal, so the difference is zero and the relay stays still — no matter how large the load current is. That is the great strength of differential protection: it is completely unaffected by load, and it responds only to faults inside its own zone. It is unit protection, and it operates instantaneously.
The Merz-Price circulating-current scheme
The Merz-Price scheme uses two identical current transformers, CT1 and CT2, placed at the two boundaries of the protected zone and connected in series through pilot wires. The relay's operating coil is connected across the electrical midpoint of the pilot loop — the equipotential points — as shown in the figure.
Figure 5.2: Circulating-current (Merz–Price) differential protection scheme. Under normal conditions the secondary currents circulate in the pilot loop and no current flows through the operating coil; an internal fault drives a differential current through the coil and trips the breakers.
Normal load or external fault: the relay stays still
Under normal load, or during an external through-fault outside the zone, the current entering the zone equals the current leaving it: I1 = I2. The two CT secondaries are therefore equal too, i1 = i2, and they simply circulate around the pilot-wire loop. The two ends of the operating coil sit at the same potential, so Idiff = i1 − i2 = 0 — no current flows through the relay, and it does not operate, even for a huge external fault current.
Internal fault: the relay trips instantly
When a fault occurs inside the zone, the symmetry breaks: either I1 ≠ I2 (the fault draws extra current from one side), or I2 reverses direction (the fault is fed from both sides). The secondary currents no longer cancel, and a differential current Idiff = i1 + i2 is driven through the operating coil. The relay trips the breakers at both ends of the zone instantaneously, isolating the faulted apparatus.
Where it is used
Differential protection is the standard unit protection for the most valuable plant on the system:
- Synchronous generators
- Power transformers
- Busbars
- Large induction motors
For transformers the basic scheme is extended with percentage bias and harmonic restraint (covered in Q6(b)), because transformer inrush current would otherwise cause false trips — but the circulating-current principle underneath is exactly the Merz-Price scheme described here.
Key points to remember
- Differential relay = ANSI 87; it operates on Idiff = |I1 − I2|.
- Merz-Price scheme: identical CTs at both zone boundaries, secondaries in series via pilot wires, operating coil across the equipotential midpoint.
- Normal load or external fault: I1 = I2 → i1 = i2 circulates, Idiff = 0, relay stays still.
- Internal fault: symmetry breaks → Idiff = i1 + i2 through the coil → instantaneous trip.
- Used for generators, power transformers, busbars and large induction motors.
Based on Power System Protection & Switchgear, Paper II, Q5(b), Exam 11 June 2026.