The working principle of fiber optical current transformer(FOCT)and fault alarm principle of optical path are introduced. The interference light intensity modulation and demodulation methods of FOCT are proposed and realized. The error δ is introduced periodically on the basis of modulating waveform

so the interference light intensity is effectively demodulated by the demodulation algorithm. The test shows that the demodulation of the interference light intensity can effectively reflect the failures of the FOCT

such as the attenuation of the optical path

the deterioration of the polarization state

and the sudden fracture. Meanwhile

the introduction of the error δ does not affect the original current and the modulator error ε

and the 0. 2-level accuracy of GBT20840. 8 standard can be achieved within the range of -40 ℃~+70 ℃ in the FOCT closed-loop system. The correctness of the method is proved by experimental results.