Arcing, partial discharge, and localized overheating in the insulation system of transformers result in chemical decomposition of the insulating oil and other insulating materials. This may generate various gases, some of which are combustible. Typically, gases are generated in the oil and then partitioned into the gas space according to their individual solubilities. Gases which are highly oil-soluble, such as acetylene, may not be in significant quantities in the gas space until an incipient fault has progressed to a very serious condition or failure of the transformer. Gases such as carbon monoxide and hydrogen which have low solubilities in oil can make up a large fraction of the combustible gases in the gas space. Detection of these gases is frequently the first available indication of a malfunction. Portable combustible gas meters are a convenient means of detecting the presence of generated gases.

Normal operation of a transformer may result in the formation of some combustible gases. The detection of an incipient fault by this method involves an evaluation of the amount of combustible gases present, the rate of generation of these gases, and their rate of escape from the transformer. Refer to IEEE C57.104 for detailed information on interpretation of gassing in transformers.