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Well, it seems about time to add to my list of electrical theory questions with answers far too broad for one question, so:

I understand that the Earth can act as a giant capacitor, conductor, etc.  What I don't understand is why.  For instance, why would ac power from the hot wire dissipate into the ground?  (and, for that matter, will power from the neutral wire not do so?  If so, why?)

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"For instance, why would ac power from the hot wire dissipate into the ground?"

At the other end, at the generating station, the generating equipment is also grounded and if a hot wire touches ground it completes the circuit and current flows.

As others have said the neutral and ground in your house should be the same potential as they are connected. However if the neutral wire is cut or broken in a "live" circuit, (say a power outlet with something plugged into it and switched on), the neutral now has the same potential as the active (hot) wire, and would now "dissipate" it's current into the earth, or through something (someone) that gets between it and the earth.

Think of some biosphere as a huge, self-charging polarized capacitor. The clouds are the positive plate the ground is, well, the ground plate, and the air is the dielectric. if the positive side is over-charged enough, it will break through the dielectric, dumping its positive charge into the ground, returning the system to its default ground state, no charge difference. For AC power where I live, there is a charge difference of about 120v between hot and ground, though not enough to break through the dielectric(air, plastic, drywall, etc.), you can ground it yourself. Earth ground can absorb all the energy you can put in it, it might not be able to dissipate as fast as you can put it in, but it will absorb it all.

The higher the voltage... the better it conducts in water filled objects.  YOU and the EARTH are both water-filled objects.  So earth ground is used First for safety to help protect PEOPLE from being electrocuted ... and SECOND to protect property from lightning strikes.   LIGHTNING is extremely high voltage.  Millions of volts and thousands of amperes.  Some powerlines can carry a hundred thousand volts.... but even a "lower" voltage feederline primary can carry several thousand volts and is very deadly.

When lightning hits powerlines, it can flow on all 3 lines... hot, neutral, and ground.   Hopefully most will flow to ground harmlessly and not cause damage to the home or people inside.  However a direct strike from lightning is impossible to fully protect yourself from its effects.  Because EVERYONES home is grounded and many poles are grounded.... the effects are usually localized and not throughout whole neighborhoods when lightning strikes.

Here is a little factoid for you to think about :    If a spark coil transformer can make a ONE INCH electric spark jump from its terminals... that is about TEN THOUSAND VOLTS.   A "two-inch" spark is TWENTY thousand volts.....

Now calculate the voltage of a lightning strike which is 700 feet long.

When you calculate this voltage, you will no longer stand under a tree during a thunderstorm and will be AFRAID to carry an umbrella in a thunderstorm.
(its like holding a LIGHTNING ROD just TEMPTING the lightning to come down and hit you!!!

Earth ground is just that, a physical electrical ground to the earth. Electric companies place copper rods into the ground, at power stations and connect the neutral ground to it. Similarly your electrical panel will probably have two earth grounds. One will be from your electrical panel to a copper water pipe, and another to a physical rod driven into the ground outside of your house usually near the power panel. Both will be connected to the neutral side of your power panel.

If you've ever seen a 'downed' electric line, you probably saw all kinds of sparks because when the hot wire comes in contact with the earth a short-circuit will occur causing a large spark that can potentially burn out wiring. It can also kill a human.

A ground is just a reference.

The neutral wire is connected to the earth ground. Why? Because it's ubiquitous, and it's the grounding "system" for the natural world. It's an easily attainable reference.

A fixed voltage potential exists between "Hot" and "Neutral." Once the "Neutral" is connected to the earth ground, then there will be some current flow in a connection between "Hot" and earth--the earth-referenced "Neutral" is what's holding the "Hot" voltage at a fixed reference apart from earth.

But you can create your own separate reference for the "Hot" wire, if it's a closed system and NOT connected to the earth at any point. Within that system, HOT can be the ground reference...

You can take GND / 0V as the ground it's something of a definition. As other's said neutral is tied to ground / the ground as 0V, the potential difference is between ground / the ground in the live wire. Power plants are similarly tied to the ground.

L

The neutral wire *is* essentially a ground in most house wiring (though separate from the safety ground circuit).

The "giant capacitor" analogy is not bad. The AC line is alternately pushing electrons through the wire and out to the ground, then (as the voltage reverses) pulling the electrons back through the wire and drawing them out of the ground. Given a good enough earth connection, that's sufficient to provide the current flow you need to power your lights and other devices.

You aren't dissipating "power" -- power is watts, and watts are used only when work is done. There's a tiny bit of power being lost to resistance in the circuit (and in the earth), but it's normally negligible compared to what's being used by the actual device you've plugged in. A perfect non-resistive load would actually draw no power -- and do nothing useful.

Because the ground has a finite resistance ? The neutral wire is electrically bonded to earth, so its voltage relative to earth is zero, so no current flows.