Carbon-fibre reinforced composite laminates are extensively used in aerospace, automotive, wind energy and marine engineering structures due to their light-weight advantage, high-energy absorption capability, fire resistance, high stiffness-to-weight ratios and construction flexibilities. This work is mainly focused on the analysis of nonlinear ultrasonic guided wave propagation and breathing-debond source localisation in a stiffened composite structure. In the process, the finite element method based 3D numerical simulations has been carried out on a stiffened composite structure using a preassigned network of piezoelectric transducers (PZT). From the analysis of the results, it is observed that the presence of plate-stiffener breathing-type debonds produces higher-harmonics in the registered PZT signals. Based on the identified differential parameters in the higher-harmonics, the breathing-debond source locations are effectively identified by using a fast and efficient baseline-free SHM strategy that uses Fast-Fourier-Transform of the registered sensor signals from the target structure to detect single as well as multiple breathing-debond locations in the stiffened composite structure.