When oil-insulated transformers are located indoors, because of fire hazard, it is often necessary to isolate these transformers in a fireproof vault.
Today, dry-type transformers are used extensively for indoor installations. These transformers are cooled and insulated by air and are not encased in sealed tanks like liquid-filled units. Enclosures in which they are mounted must have sufficient space for entrance, for circulation of air, and for discharge of hot air. Dry-type transformers are enclosed in sheet metal cases with a cool air entrance at the bottom and a hot air discharge near the top. They may or may not have fans for increased air flow.
In addition to personnel hazards, indoor transformer fires are extremely expensive and detrimental to plants, requiring extensive cleanup, long outages, and lost generation. Larger indoor transformers, used for station service and generator excitation, should have differential relaying so that a fault can be interrupted quickly before a fire can ensue. Experience has shown that transformer protection by fuses alone is not adequate to prevent fires in the event of a short circuit.