Differential protection is a power system relay method that compares current entering and leaving a protected zone. What controls it: CT location, CT polarity, CT ratio, transformer. Differential Relay Definition: A differential relay is defined as a device that responds to the difference between two or more similar electrical quantities, such as currents or voltages, to detect faults. Internal Faults occur inside the. A differential relay is used in the implementation of the basic protections of various equipment: generators, transformers, power lines, etc.