An open-circuit test measures a transformer's iron losses. With no current flowing in the secondary windings, and only a tiny 'magnetising' current flowing in the primary windings, there is no significant energy lost due to the resistance of the winding conductors. So a wattmeter attached to the primary of the transformer will not read any 'copper losses', only the 'iron losses' that occur in the core.
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Short circuit test and open circuit test are widely used to test the efficiency of the transformer.
For open circuit test of transformer, the secondary is open circuit and the circuit impedance is largely inductive due to the core impedance having high L as compared to R. hence the power factor is reduced, thus , we use low power factor wattmeters.
An open-circuit test is done with the transformer running at its rated voltage but with no load. This measures the power lost in the magnetic core. (IR Losses) A short-circuit test is done with the transformer running at its full rated current in all windings but at a low voltage. The secondary is shorted and the primary voltage is adjusted to give the rated current. This measures the power lost in the copper windings. (Copper losses)
In case of open circuit test of transformers we measure iron losses and hence the power lost here is being measured by the wattmeter.
Since this is an open circuit test, there is no load attached, thus all losses must be internal to the transformer.