Q: Does transformer produce reactive power kVAR loss?

A: Yes. The transformer by itself generates reactive power due to it's inductive nature. Even when at no load,  transformer generates no-load loss expressed as  active power (watt) and reactive power (var).

While no-load loss in watt is well-known parameter in transformer, reactive power kvar is given less attention, merely because kvar produced by transformer becomes less significant or can be ignored when transformer is loaded (remember the power triangle, phasor relationship between power factor cos phi, active power watt and reactive power var). The higher active power compared to reactive power, the better power factor will be (full load condition). If active power is less or zero (no-load condition), power factor becomes very low since the power triangle is made up from transformer's no-load watt and var losses only.

Transformer no-load kvar loss depends on kVA capacity, excitation/magnetizing current and no-load loss (watt). For example:

• 10 MVA transformer at 2% excitation current and 9000 watt no-load loss produces 200 kVAR reactive power loss at no-load.
• 4000 KVA transformer at 2% excitation current and 5000 watt no-load loss produces 80 kVAR reactive power loss at no-load. 

The electric utility company (PLN) charges extra kvar bill at power factor less than 0.8,  please be aware when transformer in no-load condition for long period of time. Since the upstream capacitor bank installation can be uneconomical solution, the best way to avoid extra kvar charge at no-load is to disconnect transformer from upstream. If you can't completely break transformer upstream connection because small load still required, consider additional small transformer to handle this condition.