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1) Article 702.5 (Transfer Equipment) within the National Electrical Code requires that all standby or portable generator installations have either a manual or automatic transfer switch installed or an Interlock device (commonly used for portable generators) installed on the main breaker of the electrical panelboard to prevent back-feeding standby power to the public utility grid during a power outage.
Back-feeding alternate power to the public utility grid either by generator or solar or wind or inverter when not having the proper transfer equipment installed at the main service is a direct violation of the NEC.
2) An automatic transfer switch is just that. The ATS automatically transfers the interconnection of utility grid and alternate sources of supply voltage via a contactor. Older versions of ATS's did not have a main service disconnect as you mention. Generac also sells a Load Center transfer switch which is installed like a sub-panel and contains the critical circuit breakers that can manually be turned OFF. Generac sells an optional GenReady Load Center that provides for manual or automatic operation. In addition, Generac also sells an open transition ATS version.
See Generac link shown below for automatic transfer switches:
3) A Liquid Propane (LP) tank should always contain a manual disconnect shut OFF valve at the tank in addition to the shut off valve at the generator.
4) Last but not least, keep in mind that the local Authority Having Jurisdiction (local electrical inspector) can always over ride the NEC as local electrical codes can take precedence. The AHJ has the final say-so as to the type of transfer switches allowed within their local code jurisdiction.
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