Electrical – Stacking ‘Main lug’ load centers for garage

Plan A is NO. An open neutral will put 120V on every grounded surface (i.e. light switch cover screws).

Plan B is NO. A ground fault will put 120V on every grounded surface.

Also, plan B will fail to trip breakers in the event of a high current ground fault. It is a terrible plan.

If you want to do it with 3 wires, you have two options, one bad.

Install 120V-only service.

Your 3 wires are L1 Hot, Neutral and Ground.

Install 240V-only service.

Your 3 wires are L1 Hot, L2 Hot and Ground. Use exclusively 240V loads (easier than it sounds) and install NEMA 6 outlets exclusively. It is not legal to do this in residential space or other domicile (hotel rooms etc.)

The problem with this strategy is keeping it pure. Some yutz will want to install a 120V load later, and he'll bootleg neutral which will render it unsafe the same as Plan A.

Transformer

This only requires 2 wires, but it requires a transformer. In this case you make the outbuilding its own main panel, with its own local grounding system. It is electrically isolated from the supply by the transformer, so neutral is locally derived and you don't (and shouldn't) connect it to the main building's neutral/ground in any way.

Costwise, there's a "tipping point" depending on distance, whether the cost of wire justifies the transformer. For very long runs, there's another tipping point where "step-up" transformers make sense. This is why Tesla won the war of the currents.

If this is the only panel box, or the main panel box, then the neutral and ground wires may terminate at the same set of bus bars. This is where the neutral and ground wires are bonded together. What we might be seeing is a dual bus bar setup that is stacked and offset like stadium seating. They are likely permanently bonded together. There is no stipulation in the order of termination so long as only one wire is secured per terminal (unless the manufacturer specifies otherwise).

The ground wires outside of the box are improperly terminated. They should run into the box and to those bus bars. Look at the corrosion and dirt on that twisted mess. It most likely is not able to conduct fault current properly to trip a breaker. That's a fire and electrocution hazard right there.

Splices in the panel box are allowed so long as they are properly spliced and the total wire volume does not fill the panel to the point where you need to squeeze the cover on or tamp the wires so the cover fits.

Multiple cables through a single clamp is also a violation as the clamps are only rated to secure a single cable. The only way multiple wires can terminate to the same knockout is if the clamp is rated to do so. Standard clamps in the picture are rated for a single cable only. Multiple wires in a single clamp can slide against each other allowing them to pull out. So the dunderhead electrician tightens the clamp even more possibly damaging the cable in the process.

This is an older panel box which was built in a time where the NEC didn't stipulate more room for a panel box. Modern boxes have much more room. Tandem breakers or skinnies are allowed only if the number of circuits does not exceed the panels rating. E.g. a panel rated for 20 circuits which has 20 spaces (a 20/20 panel) can only have 20 circuits regardless of the type of breaker used. You could have 5 tandems and 10 singles for a total of 20 circuits. It can not be filled with 20 tandem breakers for 40 circuits or any combination which exceeds 20 circuits UNLESS the panel has a higher circuit to space rating like 20/40. This change was done in 2014 to alleviate overcrowded panels.