Sparking at Terminals

Transformers can spark for a number of reasons, including:
Power surges
When a transformer is overcharged, the wiring can heat up and cause a spark.
Disconnecting a battery
When a battery is disconnected, the magnetic field around the coil collapses, generating voltage.
Overloading
When a transformer is subjected to high current or voltage, the insulation can break down and lead to an explosion.
Short-circuits
When a short-circuit occurs within the transformer, a large amount of current can flow through the windings, leading to an explosion.
Transformers are made of mineral oil, which keeps them cool. However, the high power can cause a transformer to rupture, usually with a very loud bang.
Transformers are equipped with standard protections, but they can still explode and lead to fire. Between 2 and 4% of transformers can be expected to cause a fire during their service life.
Metal oxide surge arresters (ZNO) are used widely in power systems to protect equipment from over voltages.