This paper proposes a novel distributed fault detection and isolation approach for the monitoring of non linear large-scale systems. The proposed architecture considers stochastic characterization of the measurement noises and modeling uncertainties, computing at each step stochastic timevarying thresholds with guaranteed false alarms probability
levels. The convergence properties of the distributed estimation are demonstrated. A novel fault isolation method is proposed basing on a Generalized Observer Scheme, providing guaranteed error probabilities of the fault exclusion task. A consensus approach is used for the estimation of variables shared among more than one subsystem; a method is proposed to define the time-varying consensus weights in order to minimize at each step the variance of the uncertainty of the fault detection and isolation thresholds. Detectability and isolability conditions are provided.
