Modelling and simulation have now become standard methods that serve to cut the economic costs of R&D for novel advanced systems. This paper introduces the study of modelling and simulation of the infrared thermography process to detect defects in the hydroelectric penstock. A 3-D penstock model was built in ANSYS version 19.2.0. Flat bottom holes of different sizes and depths were created on the inner surface of the model as an optimal scenario to represent the subsurface defect in the penstock. The FEM was applied to mimic the heat transfer in the proposed model. The model’s outer surface was excited at multiple excitation frequencies by a sinusoidal heat flux, and the thermal response of the model was presented in the form of thermal images to show the temperature contrast due to the presence of defects. The harmonic approximation method was applied to calculate the phase angle, and its relationship with respect to defect depth and defect size was also studied. The results confirmed that the FEM model has led to a better understanding of lock-in infrared thermography and can be used to detect subsurface defects in the hydroelectric penstock.