Why is water content critical in transformer oil analysis?

Water content is critical because moisture sharply reduces dielectric strength and accelerates cellulose paper aging. Even small increases can trigger partial discharge under high voltage stress. Moisture also promotes acid formation and sludge, worsening cooling. Since paper insulation holds most moisture, oil measurements help infer overall moisture equilibrium in the oil paper system. Managing moisture through sealing, breathers, and dehydration improves reliability and extends insulation life.