Power transformers are critical assets in power systems, ensuring voltage regulation and supply reliability. However, increasing electricity demand and aging infrastructure have led many units to operate beyond their design life, increasing the risk of performance degradation and failures. This paper proposes an integrated decision-making framework for transformer replacement that combines technical and financial assessments.

The technical evaluation applies the Health Index (HI) method, incorporating equipment age, Dissolved Gas Analysis (DGA), insulating oil quality, loading pattern, and projected load growth. Parameter weighting is determined objectively using the Analytical Hierarchy Process (AHP). The financial evaluation employs the Time Value of Money (TVM) approach, calculated through Net Present Value (NPV), Internal Rate of Return (IRR), Benefit-Cost Ratio (BCR), and Payback Period (PP).

The results show that Transformer C (31 years, 20 MVA) is the highest priority for replacement due to its critical technical condition and favorable financial feasibility. Transformer A (22 years) is ranked second, while Transformer B (16 years) remains reliable with monitoring. Financially, immediate replacement (year 0) provides the greatest benefits, as delays reduce NPV and extend PP. Moreover, an uprating option from 20 MVA to 30 MVA is recommended to address projected future demand.

The integration of HI–AHP with TVM provides a comprehensive, objective, and practical framework for asset management, offering a reliable decision-support model for transformer replacement at PT PLN (Persero) UPT Palembang.