To better understand how harmonic currents affect transformers one must first understand the basic construction. For power transformers up to about 50 MVA, the typical construction is core form.  The low-voltage winding is generally placed next to the core leg, with the high-voltage winding wound concentrically over the low-voltage winding.

For some high-current transformers, these windings may be reversed, with the low-voltage winding wound on the outside over the high-voltage coil. The core and coils are held together with core clamps, and the core and coil is generally enclosed by a tank or enclosure.

Losses in the transformer can be broken down into core loss, no-load loss, and load loss. Load losses can be further broken down into I^2R loss and stray loss. Stray loss can be further broken down into eddy current losses and other stray losses.

Electromagnetic fields from the ac currents produce voltages across conductors, causing eddy currents to flow in them. This increases the conductor loss and operating temperature. Other stray losses are due to losses in structures other than the windings, such as core clamps and tank or enclosure walls.

The region of maximum eddy-current losses is the upper region of the winding, near the high–low barrier. The same usually exists at the bottom of the transformer winding as well, but it is typically the upper region that has the most damaging effects, as it is in a higher ambient temperature of liquid or air. Core-loss components can be broken down into core eddy loss, hysteresis loss, and winding-excitation loss.

These losses are a function of the grade of core steel, the lamination thickness, the type of core and joint, the operating frequency, the destruction factor during manufacture, and the core induction. Harmonic currents can create harmonic voltage distortions and somewhat increase the core loss, the exciting current, and sound levels while leading to potential core-saturation problems.

However, this is not considered to be the main cause of problems in rectifier transformers. ANSI/IEEE C57.18.10 does not calculate any effect on the core loss by the harmonic currents.

Other stray losses are generally proportional to the current squared times the harmonic frequency order to the 0.8 power, as shown earlier in Equation 2.4.2. Metallic parts will increase in temperature, and load loss will increase.

These losses are generally not detrimental to the life of the transformer as long as the insulating system is not damaged. The metallic parts typically affected are the core clamps, winding clamping structures, and tank or enclosure walls.

The use of nonmagnetic materials, magnetic shields, conductive shields, increased magnetic clearances, and interleaving of high-current buswork are useful methods in reducing the stray losses that are amplified by the harmonic currents.

 Eddy-current losses in the windings are affected mostly by harmonic currents. The eddy-current loss is proportional to the square of the load current and the square of the harmonic frequency. These losses are increased in the hottest-spot area of the winding and can lead to early insulation failure.

The transformer designer must make efforts to reduce the winding eddycurrent losses due to the harmonic amplification of these losses. Careful winding and impedance balances, dimensioning of the conductors, and transposition of the conductors are useful methods in this effort.

I^2R losses increase as the rms current of the transformer increases. A transformer with a higher harmonic spectrum will draw more current from the system.

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