In this paper a new approach to parametric change detection and failure diagnosis for interconnected power units is proposed. The method is based on a new nonlinear filtering scheme under the name Derivative-free nonlinear Kalman Filter and on statistical processing of the obtained state estimates,
according to the properties of the statistical distribution. To apply this fault diagnosis method, first it is shown that the dynamic model of the distributed interconnected power generators is a differentially flat one. Next, by exploiting differential flatness properties a change of variables (diffeomorphism) is applied to the power system, which enables also to solve the associated state estimation (filtering) problem. Additionally, statistical processing is performed for the obtained residuals, that is for the differences
between the state vector of the monitored power system and the state vector provided by the aforementioned filter when the latter makes use of a fault-free model. It is shown, that the suitably weighted square of the residuals’ vector follows the statistical distribution. This property allows to use confidence intervals and to define thresholds that demonstrate whether the distributed power system functions as its fault-free model or whether parametric changes have taken place in it and thus a fault indication should be given. It is also shown that the proposed statistical criterion enables fault isolation to be performed, that is to find out the specific power generators within the distributed power system which have exhibited a failure. The efficiency of the proposed filtering method for condition monitoring in distributed power systems is confirmed through simulation experiments.