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How do key interlocks work?

How are Kirk key interlocks (or other brands) used to interlock circuit breakers?

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If you have two circuit breakers transferring load between a utility and main (for example) in the absence of synchronizing equipment, it is acceptable to only have one on at a time; never both.  
To accomplish this you would have a keylock in both breakers, both keyed the same, and only one key.  Without the key, the breaker is locked OFF, so only the one breaker with the key can be turned ON.  This prevents both sources from feeding the load simultaneously.

If you have three breakers in a main-tie-main arrangement, it is acceptable to have any two breakers on at a time.  So each breaker has a lock, all keyed alike, and you are provided two keys.  The breaker without a key cannot be turned on but the others can, satisfying the need.

Other keying schemes are possible; these illustrate the principle.
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