Optical fiber is made of glass, an insulator, and thus it is immune to strong electromagnetic interference. Therefore, fiber optics is a technology ideally suitable for sensing of partial discharge (PD) both in transformers and generators. Extensive efforts have been used to develop a cost effective solution for detecting partial discharge, which generates acoustic emission, with signals ranging from 30 kHz to 200 kHz. The requirement is similar to fiber optics Hydro Phone, but at higher frequencies. There are several keys to success: there must be at least 60 dB signal-to-noise ratio (SNR) performance, which will ensure not only PD detection but later on provide diagnostics and also the ability to locate the origin of the events. Defects that are stationary would gradually degrade the insulation and result in total breakdown. Transformers currently need urgent attention: most of them are oil filled and are at least 30 to 50 years old, close to the end of life. In this context, an issue to be addressed is the safety of the personnel working close to the assets and collateral damage that could be caused by a tank explosion (with fire spilling over the whole facility). This paper will describe the latest achievement in fiber optics PD sensor technology: the use of phase shifted-fiber gratings with a very high speed interrogation method that uses the Pound-Drever-Hall technique. More importantly, this is based on a technology that could be automated, easy to install, and, eventually, available at affordable prices.