250.20(D) Separately Derived Systems. Separately derived systems, as covered in 250.20(A) or (B), shall be grounded as specified in 250.30(A). Where an alternate source such as an on-site generator is provided with transfer equipment that includes a grounded conductor that is not solidly interconnected to the service-supplied grounded conductor, the alternate source (derived system) shall be grounded in accordance with 250.30(A).
FPN No. 1: An alternate ac power source such as an on-site generator is not a separately derived system if the grounded conductor is solidly interconnected to a service-supplied system grounded conductor. An example of such situations is where alternate source transfer equipment does not include a switching action in the grounded conductor and allows it to remain solidly connected to the service-supplied grounded conductor when the alternate source is operational and supplying the load served.
FPN No. 2: For systems that are not separately derived and are not required to be grounded as specified in 250.30, see 445.13 for minimum size of conductors that must carry fault current.