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Paper presents a model-based fault detection and isolation technique which relies on system identification procedure. Several open-loop identification methods are discussed since they are usually less complex and thus easier for implementation in large-scale systems. However, since the system analysis is usually conducted in a closed-loop structure, prediction error based direct closed-loop method was also taken into consideration. The efficiency of these four identification methods is demonstrated keeping in mind the final goal of the algorithm, which is the fault detection and isolation. Therefore, the performance of these methods in the light of FDI is emphasized, while the accuracy of parameter estimates is considered less important. The comparative analysis of suggested methods was done using data obtained from the steam separator in TEKO B1 unit of the Kostolac thermal power plant, Republic of Serbia.