Dielectric fluids provide two functions that are essential to proper transformer operation

An insulating function that prevents an electric arc from forming between live parts
A cooling function by circulating the fluid through the exchangers (passive radiators, cooling system, etc.)
These dielectric fluids are usually oils (mineral, plant, silicone, ester and synthetic) and deteriorate due to:

moisture content
the formation of dissolved gases
the presence of impurities
oil oxidation

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