The following answer is based to an installation where the transfer switch does not open the neutral.
Grounding is not required, according to the grounding requirements of the NEC, since it would serve no purpose to do so. But many generator manufactures have boiler plate instructions specifying how they want the generator grounded. Because the instructions specifically require grounding, you have to waste the time and money to drive a ground rod [110.3(B)].
It’s unfortunate that many generator manufactures don’t understand the principles of grounding and the NEC requirements for such equipment. I hope that one day the generator manufactures would simply state that the generator must be grounded in ‘accordance with the NEC.”
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