The integration of Distributed Generation (DG) such as Photovoltaics (PV) coupled with high ambient temperatures, particularly in regions like NW Saudi Arabia (50°C), subjects conventional mineral oil (MO) distribution transformers (DTs) to severe thermal and electrical stress. This paper presents an eco-design solution: a 1000 kVA DT utilizing Natural Ester (NE) fluid and semi-hybrid Class 120 insulation, optimized to comply with Tier 2 loss requirements (SGB-SMIT Group 2021). Using dynamic thermal modeling (IEC/IEEE Guide) and the Arrhenius Law, the NE eco-design is compared against a conventional MO unit under a realistic load profile (70% base load, 30% PV injection). The simulation demonstrates that the combination of improved efficiency and high-temperature insulation provides a 2.38x extended lifespan (52.0 years vs. 21.8 years). Furthermore, the Tier 2 design results in a 24.8% reduction in daily energy losses (165.7 kWh to 124.7 kWh). This reduction translates to a total saving of 185.5 tons of CO₂ emissions over the baseline lifespan, based on the Saudi national emission factor. The results confirm that the NE eco-design is essential for ensuring grid resilience, sustainability, and reliability in challenging, high-PV, high-ambient environments.