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A transformer is a passive component that transfers electrical energy from one electrical circuit to another circuit, or multiple circuits. A varying current in any coil of the transformer produces a varying magnetic flux in the transformer's core, which induces a varying electromotive force across any other coils wound around the same core. Electrical energy can be transferred between separate coils without a metallic (conductive) connection between the two circuits. Faraday's law of induction, discovered in 1831, describes the induced voltage effect in any coil due to a changing magnetic flux encircled by the coil. Transformers are used to change AC voltage levels, such transformers being termed step-up or step-down type to increase or decrease voltage level, respectively. Transformers can also be used to provide galvanic isolation between circuits as well as to couple stages of signal- processing circuits. Since the invention of the first constant-potential transformer in 1885, transformers have become essential for the transmission, distribution, and utilization of alternating current electric power. A wide range of transformer designs is encountered in electronic and electric power applications. Transformers range in size from RF transformers less than a cubic centimeter in volume, to units weighing hundreds of tons used to interconnect the power grid.

Small dry-type transformers are often self-cooled by natural convection and radiation heat dissipation. As power ratings increase, transformers are often cooled by forced-air cooling, forced-oil cooling, water-cooling, or combinations of these. Large transformers are filled with transformer oil that both cools and insulates the windings. Transformer oil is a highly refined mineral oil that cools the windings and insulation by circulating within the transformer tank. The mineral oil and paper insulation system has been extensively studied and used for more than 100 years. It is estimated that 50% of power transformers will survive 50 years of use, that the average age of failure of power transformers is about 10 to 15 years, and that about 30% of power transformer failures are due to insulation and overloading failures. Prolonged operation at elevated temperature degrades insulating properties of winding insulation and dielectric coolant, which not only shortens transformer life but can ultimately lead to catastrophic transformer failure. With a great body of empirical study as a guide, transformer oil testing including dissolved gas analysis provides valuable maintenance information.
Building regulations in many jurisdictions require indoor liquid-filled transformers to either use dielectric fluids that are less flammable than oil, or be installed in fire-resistant rooms. Air-cooled dry transformers can be more economical where they eliminate the cost of a fire-resistant transformer room. The tank of liquid-filled transformers often has radiators through which the liquid coolant circulates by natural convection or fins. Some large transformers employ electric fans for forced-air cooling, pumps for forced-liquid cooling, or have heat exchangers for water-cooling. An oil-immersed transformer may be equipped with a Buchholz relay, which, depending on severity of gas accumulation due to internal arcing, is used to either alarm or de-energize the transformer.