HVAC cable is normally installed in a PE (Polyethylene) pipe underground. The pipe is placed in the underground path formed by horizontal directional drilling (HDD). During power transmission, the generated heat from the cable is dissipated by natural convection of water in the gap between cable and pipe. In this project, the first part focuses on the analysis of natural convection in water in the annulus space formed by a cable-pipe boundary. The second part simulates the heat dissipation process of the underground cable-water-pipe system with the influence of the layered soil. The temperature distribution along the HDD path shows an abnormal variation due to different thermal conductivity of soil layer, which causes some hotspots to form on the surface of the pipe. Heat transfers by conduction, convection and radiation. In this project, only conduction and convection are considered. The thermal radiation analysis is not considered and reserved for future study. Convection can only occur in fluid (liquid or gas). In convection mode, the fluid near the heat source which gains energy become less dense and rises forming a convection flow. The thesis covers two main sections. The first section covers analysis of two problems: the first one is the study of natural convection in the concentric annulus (corresponds to the geometry of cable at the centre of the pipe) and the second one is the natural convection analysis in the eccentric annulus (corresponds to the geometry that cables touches the pipe bottom due to gravity). For the concentric annulus, the highest temperature occurs in the top region of the annulus. For the eccentric annulus, the highest temperature occurs in the narrow region where the inner cylinder touches the outer cylinder. Generally, in the laminar flow regime, the eccentric annulus has a poorer heat transfer rate compared to the concentric annulus. In the second section, a time-dependent model based on the HDD scenario is built in COMSOL, taking into account the influence of natural convection in water and inhomogeneous thermal conductivity of layered soil. The heat transfer process from the cable to the soil along the HDD path is simulated. The heat dissipation rate from the pipe to soil varies due to different thermal conductivity of each soil layer, which causes unpredictable temperature changes at different position of the pipe surface. Hence, some hotspots form on the surface of the pipe. The location of hotspots is detected by numerical modelling in COMSOL. The simulation model can be used in the future for localization of potential hotspots and cable life calculation.