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In a nut shell. Transfer switch senses incoming voltage (power company) through a relay. When relay drops out due to lack of voltage, contacts close and start the generator.
When generator gets up to speed, second relay senses the generator’s voltage and opens contactor that is connected to power company’s incoming voltage. When that contactor is open, its auxiliary contact closes the generator contactor. The load side of both contactors are connected together to a load (could be a house, factory, hospital, machinery) With the generator contactor now closed the generator is supplying voltage to the load. Still with me? When the incoming (power company) voltage resumes, it energizes a timer until the power is stabilized, usually about 5 minutes. The timer contacts drop the generator contactor out, dropping the load for about a 1/4 of a second and re-energizes the incoming voltage contactor. The generator usually stays running up to 10 minutes to cool down and it then shuts its self off. The transfer switch is then ready for the next power failure. Some nut shell