In differential protection scheme, the current entering at one end of the line and leaving from other end of the line is compared. The pilot wires are used to connect the relays. Under normal working condition, the two currents at both ends are equal and pilot wires do not carry any current, keeping relays inoperative. Under an internal fault condition, the two currents at both the ends are no longer same, this causes circulating current flow through pilot wires and makes the relay to trip.

The various schemes used with this method of protection are,

1. Merz-Price Voltage Balance System

2. Translay Scheme