In recent years, polymer dielectrics have revolutionized several electrical and related fields. As inductive devices, transformers produce a lot of heat, which makes them susceptible to damage at high voltages and after prolonged use. In this case, an epoxy polymer matrix with nano reinforcement is examined to investigate its potential to enhance a dry-type transformer winding's cooling and thermal conductivity. The polymer composite consists of nanocarbon blended with epoxy resin to produce a high thermal conductivity composite. Through the incorporation of a range of nanocarbon particles (2%, 4%, 6%, 8%, and 10%), the epoxy resin matrix was modified. Using central composite design optimization, the polymer composite's composition is also evaluated for optimal performance. In addition, dielectric strength, thermal conductivity, Izod impact, tensile, water absorption tests, thermogravimetric analysis, and morphological studies were conducted for the optimized value from response surface methodology. It was found that the dielectric strength was 145 V/mm, thermal conductivity was 0.45 W/m.K, and Izod impact was 0.6 (J/mm) for the optimized sample. Finally, insulation temperature tests were conducted on a 0.5-kVA dry-type transformer for a prepared sample and compared with the normal winding. The rate of decrease of insulation temperature was found to be 24.4%. The composite increased insulation performance and verified its reliability as a solid coolant. Dry-type transformers in remote microgrids distribute energy from renewable sources like solar and wind energy systems.