Why is moisture content in transformer oil a critical parameter?

Moisture lowers dielectric strength and increases the risk of partial discharge and breakdown, especially under high electric stress. It also accelerates paper insulation aging by promoting hydrolysis, which reduces mechanical strength and shortens transformer life. Water moves between oil and cellulose depending on temperature, so moisture ppm in oil can rise during cooling and fall during heating without total water changing. Controlling moisture through sealed systems, breathers, and oil processing is essential to maintain insulation margin and reliability, particularly for older transformers.