Insulation coordination is the process of matching electric equipment's insulation strength with protective device characteristics to protect the equipment against expected overvoltages. This selection is based on engineering judgment and cost. Equipment can generally withstand short-duration high transient overvoltages, but repeated tests with identical waveforms can yield inconsistent results. As a result, standard impulse voltage waveforms are used for testing, defined by specific times for the voltage to peak and decay to half its peak value.

The Basic Insulation Level (BIL) is defined as the peak value of the standard impulse voltage wave. Standard BILs, as defined by the IEEE, ensure equipment can withstand repeated applications of this waveform without insulation failure. These BILs apply to all equipment, regardless of grounding. In practice, BILs are often expressed in per-unit values.

Protective devices play a crucial role in insulation coordination. They are typically connected in parallel with the equipment and designed to limit voltage to a level below the equipment's insulation withstand capacity. The protection margin is the difference between the equipment breakdown voltage and the protective device ceiling voltage.

Protective devices must meet several criteria: provide high impedance during normal operation to minimize losses, low impedance during surges to limit voltage, effectively dissipate or store surge energy, and return to open-circuit conditions after the surge.

Common protective devices include rod gaps and surge arresters. Surge arresters can be of various types, including air-gap with resistors or gapless designs, and they operate by limiting voltage and dissipating energy during overvoltages.

Effective insulation coordination ensures the reliable operation of power systems by protecting equipment from overvoltage damage, as a result, maintaining system stability and longevity.