A Neutral wire is a wire that carries the circuit back to an original power source. Neutral electrical wires are a vital component of any electrical system. They provide an efficient way to transmit electricity from the source to outlets, equipment, and appliances safely. A neutral wire is typically identified by white or gray exterior insulation, while live or hot wires are usually covered with black or red insulation. The purpose of a neutral wire is to connect the grounded conductor in the circuit back to the main service panel.