While designing transformer this average load factor (α) for a transformer is estimated from the load demand charts/curves.Power transformer in power plants and in substations operate at full load, therefore the load factor for power transformer is designed at 0.8. Means the power transformer is designed to have maximum efficiency at full load. Load on Distribution transformer varies during the day, therefore the load factor of the distribution transformer is designed as 0.5. Thus distribution transformer will have maximum efficiency at 50% of the full load.

Thus maximum efficiencies of the transformer are determined based on the type of operation it perform.