I'm failing to understand why ground wires are important in electrical outlets.
- They don't protect me if I shove a knife into the outlet.
- Without a GFCI, the circuit doesn't "know" there is a problem.
When does a ground wire help me?
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Answers provided so far are good, but I would like to add another very important aspect of ground.
When looking at neutral vs ground, the question you ask is very natural. After all, both ground and neutral may be connected back to the same grounding bus at the circuit box.
However, there is a very important distinction! Neutral is designed to carry current while ground is not. Neutral completes the circuit, and is not a "safe" wire since the voltage will travel from the hot wire, through the load (appliance, light, whatever), then back to ground via the neutral wire.
Ground, on the other hand, is designed to never be energized under normal conditions. It is a safety wire, that should NEVER be used as part of the circuit. By design, if the hot wire ever comes in contact with ground, the circuit breaker will immediately trip to de-energize the line.
Any time metal is exposed on an appliance or fixture, the metal will be connected to the ground wire. This ensures the metal never becomes energized, potentially causing electrocution.
GFCI is a different subject, which really has nothing to do with the ground wire. Ground wire WILL protect you against scenarios where the hot wire comes into direct contact with any (grounded) metal. But if the hot wire comes into contact with water it may or may not trip a standard breaker. This is because water, while a potential conductor of electricity, is not a perfect conductor. The circuit breaker may simply view the water as "normal load". GFCI's are specifically designed to protect in these type of situations. This is why GFCI is required for outlets in areas where water is expected, but not for areas expected to stay dry.
Ground wires in receptacles perform two basic functions:
Path for surge protection and other things that are not part of the regular circuit
Complete the circuit in certain fault situations
I would generally consider the 2nd of these the most important.
Consider a typical metal case appliance (washing machine, dryer, oven, etc.) or a metal junction box. If there is a fault where a hot wire touches the metal case, without a ground wire the circuit is not completed but the case is now "hot". If someone then touches the case, some of the electricity may flow through them to the actual ground (the earth beneath their feet) and kill them. Really.
If that same appliance or metal box has the metal connected to a proper ground (wire or metal conduit going back to the main panel neutral/ground bond) then the circuit is completed and, assuming the fault results in overcurrent (e.g., a "short circuit") then the breaker trips quickly.
A GFCI will effectively take care of most of these situations, and in fact do so faster than a regular circuit breaker in many cases. However, ground connections have been around for a long time compared to GFCI, and GFCI is still relatively expensive to install, particularly on high current (30A or more) 240V circuits. So GFCI as an alternative will work, except for the surge protection issue, and in fact is approved as a substitute when a ground wire is not available/practical.
As far as the "shove a knife in the outlet" problem. That is a little different and has multiple solutions:
By abolishing grounds you now have nowhere for fault current to go. So an appliance develops a hot-chassis fault, and the chassis is energized at line voltage. "Who cares," you say. "Anyone who touches it is now biased at GFCI-protected line voltage and that's that. They won't get shocked, because there's nothing for them to be shocked in relation to. This house doesn't have grounds and pipes are plastic." Very clever.
But because that never happens, this means, the faulty appliances are rarely detected and simply left to fester. The installed base will accumulate many appliances with longstanding faults. And so what? Even if every appliance had a hot-chassis fault and you found a way to touch 4 of them at once, they're at the same potential so again nothing to be shocked in relation to. Right?
Well... don't you think it's a coincidence that they are all hot-chassis faults and there are no neutral-chassis faults? Now what happens? One hand on GFCI-protected hot, and the other hand on GFCI-protected neutral.
The GFCI will only see a normal hot-neutral load. The GFCI will not trip and the person will die.
So you see, you really need a 3rd "external to GFCI" current path to be in the ecosystem for GFCI protection to be meaningful.
You may not realize you want this, but you want swift detection and elimination of faulting appliances. That's not going to happen without grounds.
Grounded outlets are so you can plug in appliances with a three prong, grounded, plug.
How it was explained to me 62 years ago. A plumber is under the sink drilling some holes to support pipes. It's cramped so he's holding on to some drain pipe for support. The hot wire from the drill breaks away from the switch of the drill and comes in contact with the drill metal housing. Voltage and current from the drill housing goes through the plumber to the grounded pipe. Dead plumber. If the drill housing had a ground wire, the breaker/fuse would have tripped/blown then the hot wire came in contact with the metal housing of the drill. Live, scared plumber.
Ground is not perfect, but is there in case the metal case/housing of a device/appliance comes in contact with a hot/live wire.
No ground so when you touch the appliance you are touching live power.
All you have to do is also touch something that goes to ground(sink/faucet) and the power goes though you at least causing bad hurt/burns, possible death.
With ground, when the hot/live wire touches the metal housing, it will trip the breaker and you only miss having toast.
GFCIs do this much better in that they will trip if only a tiny amount of power goes where it is not suppose to, so the most you would feel is a tiny spark like static electricity.
Usually if you are not touching something that goes to ground, putting one knife into a outlet will probably not do anything to you. Trying the same with a light socket if much different and hope your breaker works.
There are some great answers here which cover the key points comprehensively, but I just want to make one extra point.
Two ends of a wire will always have (almost) the same voltage. If you take a wire and connect one end to ground, the other end of the wire will always have the same voltage as ground. If you connect the other end to the metal case of an applicance, the case will always have the same voltage as ground.
Whatever else you connect to that case -- whether it touches a live wire, neutral, whatever -- the case will always have the same voltage as ground. It has to, because it's physically wired to the ground.
If someone touches a metal case which has the same voltage as ground, while standing on the ground, then they are not going to get electrocuted.
The ground connection is there to ensure that, whatever else happens, whatever else comes into contact with that metal case, and whatever else goes wrong, someone cannot get electrocuted by it.
The fact that fuses blow and GFCIs trip if a live wire ends up coming into contact with a grounded metal case is great. However, the key takeaway is that by physically wiring your metal case into the ground, you make sure that someone cannot get electrocuted by touching the case.
You're ignoring faults such as where a hot live wire goes loose and touches the metallic case of an appliance.
But my understanding is that even if you did not use ground to re-direct fault currents, ground is required for safety.
Since the electrical grid is very expansive it intercepts a lot of charge moving between the earth and atmosphere and this can cause the common mode voltage that the hot and neutral share rise dangerously above the potential of the Earth (which is the potential you are probably near). I suppose the most obvious example is if somewhere in the grid gets struck by lightning.
So things like giant sparks might jump out at you when you reach for the light switch or electrical socket.
I'll have to verify this though.