Yes. Generally, the sensing points would be the grounded side of the
generator (assuming an external wye), the HV side of the main transformer,
and the load side of station service (all with suitable CT ratios). The
idea is to draw a 'circle' around the generator output and each component it
is connected to. Stations that I've seen/worked on don't have circuit
breakers between generator, step-up transformer, and station service. They
just have some disconnect switches for maintenance. So the protective
relaying treats the generator, main transformer, and station-service as one
large protective unit. The boundaries of that unit are where the
differential protection CT's are placed.
Think about what happens when you are bringing the unit on-line. Main
generator load is still very low, and you transfer 'house loads' from
reserve/off-site to station service transformer. At that point,
station-service makes up much more than 2% of the total load on the
generator. Depending the type of differential relay and the settings, you
may get away without the station service tap being in the differential
protection, but it could be 'dicey'.
All the differential protection hookups I've seen (both unit protection and
bus/transformer protection) have *always* had all branches monitored. If
the differential protection is around a large transformer, one of several
schemes may be used to prevent false tripping from magnitizing in-rush
(anything simple time-delays triggered from breaker status to harmonic
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