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In this paper, a comprehensive analytical design methodology for a single-phase axial rotary transformer (RT) is presented. The proposed procedure is designed to yield the minimum RT volume or size while at the same time offer adequate efficiency. Furthermore, the proposed methodology is used in the design and evaluation of a 1.2-kVA single-phase axial RT. The developed prototype proved that the methodology leads to a significant reduction in size as compared to a prototype designed using standard methods. The measured efficiency of this transformer is found to be 91.4%. The presented design methodology can be easily extended to a three-phase RT that can be applied in place of slip rings in brushless doubly fed induction generators (DFIGs). This could reduce maintenance downtime in the operation life of the DFIG.