As time goes, the transformer oil becomes aged. Water, heat, oxygen, to acertain extent, accelerate ageing. Alcohol, organic acid, peroxide, ketone and some other gases are produced from oil decompostion. Acid comes from some external sources.

Acidity level above 0.2mgKOH/g is not tolerable for normal operation of transformer. This is the critical acid number deterioration increases rapidly once this level exceed.

If acidity level crosses tolerable range, sludge production will start. Sludge is a polymeric type substance, which is hygroscopic and partially conductive. It is also a heat insulator. The sludge tends to clog up the cooling ducts, thus, generating more heat and causing a snowball effect.

If the acidity is too high, the transformer operator has two opinion: either replace the oil completely, or have the oil regenerated.