Unknown input observers (UIO) find application in many cases for successful fault detection and isolation (FDI). In this chapter, a scenario where the unknown input observer is applied to load frequency control loops in interconnected power systems is analyzed. A UIO was chosen because load demand is not always constant and it can be considered to introduce an unknown disturbance to the system. Mathematical formulations on how to detect and isolate sensor faults are presented which are then implemented in MATLAB Simulink for simulations. Based on this historical survey on the application of UIO, a thesis on UIO application in FDI in distributed generation is done.