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Water absorption in an epoxy composite used for insulation of stator bars in large generators is investigated in order to study both diffusion kinetics and effects on dielectric properties. Water absorption can be described by the superposition of two Fickian mechanisms, the first occurring within epoxy and the other at interfaces between epoxy and fillers. A large decrease of breakdown strength versus water uptake is observed. It points to the large deleterious effect of water on insulation reliability. Dielectric spectroscopy is performed under various conditions of water impregnation, electric field and temperature. A very large increase of permittivity and losses is recorded in the presence of water, especially at low frequency. At power frequency, dielectric properties do not show a non-linearity when the field is increased up to service values. At very low frequency, a decrease of losses when the field is increased is observed. It is due to the Garton effect. Most of results show that the wet material behaves as a low frequency dispersion system (LFD).