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International Journal of Contemporary ENERGY, Vol. 3, No. 1 (2017) ISSN 2363-6440 ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ D. Mladenovska, A. M. Lazarevska: “Indicators Relevant for Energy Security Risk Assessment of Critical Energy Infrastructure”, pp. 70–81 70 DOI: 10.14621/ce.20170109 Indicators Relevant for Energy Security Risk Assessment of Critical Energy Infrastructure Daniela Mladenovska 1 *, Ana M. Lazarevska 2 1 *JSC “Macedonian Power Plants”, Branch "Energetika" 16 Makedonska brigada bb, 1000 Skopje, Macedonia; [email protected] 2 Ss Cyril and Methodius University, Skopje, Macedonia, Faculty of Mechanical Engineering Abstract Energy security is one of the most important issues affecting not only national economies, but as well the national security systems. Hence, various approaches in different studies and reports are utilized to analyze this topic. Energy systems are subject to diverse risks and threats which can vary according to specific geopolitical circumstances, geographical location, technical failures, environmental risks, social crises and timescale. Any source of danger to the continuity of the energy production, its consumption and/or final supply or other energy services is defined as a risk to the national energy security and integrity. This topic is even more important when it comes to energy infrastructure defined as critical, which can often be subject to asymmetrical risks and threats. Bearing in mind the long history of war and conflicts, as well as recent refugees crises, the region of South East Europe, in particular the Western Balkans is quite vulnerable regarding those issues. In order to protect the energy system and to ensure its security, it is necessary to understand the causes of danger, the nature of risks, as well as to quantify their impact. Thus, identifying tangible and measurable indicators represents a sound basis towards tackling risks and preparing measures for response and mitigating consequences. 1. Introduction: Energy security and Critical Energy Infrastructure Resilience is focused on protection from disruptions originating from less predictable factors of any nature, such as political instability, game-changing innovations, or extreme weather events [1]. Having this in perspective, energy security refers to a resilient energy system. As pointed out in Brown et al. (2003) [2] such a system would be capable of withstanding threats trough a combination of (a) active, direct security measures: e.g. surveillance and guards; and (b) passive or more indirect measures: e.g. redundancy of critical equipment, diversification of fuel sources, other sources of energy, and reliance on less vulnerable infrastructure. One of the most frequently quoted definitions of energy security is Yergin’s (2006) definition, i.e. energy security is the “availability of sufficient supplies at affordable prices” [3]. It was preceded by a similar energy security definition of the European Commission (2000) [4] as the uninterrupted physical availability on the market of energy products at a price which is affordable for all consumers.” As an antipode, Bohi and Toman (1996) [5] define energy insecurity as the “loss of economic welfare that may occur as a result of a change in the price or availability of energy.Energy security focuses on the so-called Critical Energy Infrastructure (CEI); a term that is receiving increasing attention in today’s world [2]. An indicative example which can be pointed out is that much of the energy infrastructure in the Western Balkans was damaged during the conflicts related to the dissolution of the Keywords: Energy security; Critical energy infrastructure; Risk assessment; Asymmetrical threats Article history: Received: 11 April 2016 Revised: 20 January 2017 Accepted: 23 January 2017

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International Journal of Contemporary ENERGY, Vol. 3, No. 1 (2017) ISSN 2363-6440 ___________________________________________________________________________________________________________

___________________________________________________________________________________________________________ D. Mladenovska, A. M. Lazarevska: “Indicators Relevant for Energy Security Risk Assessment of Critical Energy Infrastructure”, pp. 70–81 70

DOI: 10.14621/ce.20170109

Indicators Relevant for Energy Security Risk Assessment of Critical Energy Infrastructure

Daniela Mladenovska1*, Ana M. Lazarevska2

1*JSC “Macedonian Power Plants”, Branch "Energetika"

16 Makedonska brigada bb, 1000 Skopje, Macedonia; [email protected] 2Ss Cyril and Methodius University, Skopje, Macedonia, Faculty of Mechanical Engineering

Abstract Energy security is one of the most important issues affecting not only national economies, but as well the national security systems. Hence, various approaches in different studies and reports are utilized to analyze this topic. Energy systems are subject to diverse risks and threats which can vary according to specific geopolitical circumstances, geographical location, technical failures, environmental risks, social crises and timescale. Any source of danger to the continuity of the energy production, its consumption and/or final supply or other energy services is defined as a risk to the national energy security and integrity. This topic is even more important when it comes to energy infrastructure defined as critical, which can often be subject to asymmetrical risks and threats. Bearing in mind the long history of war and conflicts, as well as recent refugees crises, the region of South East Europe, in particular the Western Balkans is quite vulnerable regarding those issues. In order to protect the energy system and to ensure its security, it is necessary to understand the causes of danger, the nature of risks, as well as to quantify their impact. Thus, identifying tangible and measurable indicators represents a sound basis towards tackling risks and preparing measures for response and mitigating consequences.

1. Introduction: Energy security and Critical Energy Infrastructure

Resilience is focused on protection from disruptions originating from less predictable factors of any nature, such as political instability, game-changing innovations, or extreme weather events [1]. Having this in perspective, energy security refers to a resilient energy system. As pointed out in Brown et al. (2003) [2] such a system would be capable of withstanding threats trough a combination of

(a) active, direct security measures: e.g. surveillance and guards; and

(b) passive or more indirect measures: e.g. redundancy of critical equipment, diversification of fuel sources, other sources of energy, and reliance on less vulnerable infrastructure.

One of the most frequently quoted definitions of energy security is Yergin’s (2006) definition, i.e. energy security is the “availability of sufficient supplies at affordable prices” [3]. It was preceded by a similar energy security definition of the European Commission (2000) [4] as the “uninterrupted physical availability on the market of energy products at a price which is affordable for all consumers.” As an antipode, Bohi and Toman (1996) [5] define energy insecurity as the “loss of economic welfare that may occur as a result of a change in the price or availability of energy.”

Energy security focuses on the so-called Critical Energy Infrastructure (CEI); a term that is receiving increasing attention in today’s world [2]. An indicative example which can be pointed out is that much of the energy infrastructure in the Western Balkans was damaged during the conflicts related to the dissolution of the

Keywords: Energy security; Critical energy infrastructure; Risk assessment; Asymmetrical threats

Article history: Received: 11 April 2016 Revised: 20 January 2017 Accepted: 23 January 2017

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___________________________________________________________________________________________________________ D. Mladenovska, A. M. Lazarevska: “Indicators Relevant for Energy Security Risk Assessment of Critical Energy Infrastructure”, pp. 70–81 71

Figure 1. Interrelationship between Energy and Other Critical Infrastructure [8] Socialist Federal Republic (SFR) of Yugoslavia in the 1990s [6]. These wars physically damaged a significant part of the energy infrastructure and energy production capacities in the affected region. The consequences were even more devastating for Serbia, as a result of the conflict in 1999, in particular as a consequence of bombarding. The existing energy infrastructure of the country was seriously disrupted resulting in severe heating and electricity shortages, although some energy resources provisions were provided from Russia [7].

Critical Energy Infrastructure is usually defined as “those assets if undelivered are expected to make significant impact on energy security and energy supply, as well as on the overall social and economic well-being of the nation. Such assets include physical energy facilities, energy supply chain, information technologies and communication infrastructure that make up and integrate an energy system.” [9] CEI assets in general can be destroyed or degraded by both natural and

human initiated threats. Any disruption of a single CEI sector – whether from a terrorist attack, natural disaster or man-made damage –, is likely to create a cascading effect on any particular country’s energy system that is both complex and interconnected. [10] The energy system could not be analysed as a separate and isolated entity since it is evolved in a complex set of nation’s infrastructure. The interconnections of the nation’s energy, water, electronics and telecommunications systems, as well as, their complexity [2], are clearly indicated on Figure 1. A good example of infrastructure’s interdependency is the case of electric power and telecommunications networks, since the power grid control and governing relies on the corresponding telecommunications infrastructure, while the power grid is crucial for telecom electricity supply [11]. By means of analysing the interdependences and their nature, as well as the importance of the connections, the indicators of critical infrastructure resilience could be defined. They are important not only for establishing a

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sound project design of the infrastructure, but can also limit the loss of functionality and improve recovery of infrastructure’s function in cases of shock or disturbance [12].

Hence, as resilience is the key issue towards enabling energy security in politically unstable and fragile environment typical for the analysed region, identifying relevant indicators that describe the system’s vulnerability and assure its stability in spite of potential (non)identified threats, should be one of the major priorities of policy makers. This paper specifically focuses on the afore mentioned topics, which although occasionally elaborated among countries in the Western Balkans region, require additional efforts in order to be in line with the European Union (EU) energy security policy. The issue of asymmetrical risks and threats has gained significant importance in today’s world, thus the necessity for protecting critical energy infrastructure has urged authorities in the South East European (SEE) region to reconsider their national security strategies.

2. Legislation framework related to Critical

Energy Infrastructure In accordance to the ANNEX I from the COUNCIL DIRECTIVE 2008/114/EC, as critical energy infrastructure related energy sources identified are as follows:

− Electricity (generation and transmission infrastructures and facilities in respect of electricity supply),

− Oil (oil production, refining, treatment, storage and transmission by pipelines), and

− Gas (gas production, refining, treatment, storage and transmission by pipelines; Liquefied Natural Gas (LNG) terminals).

The European Commission denotes critical energy infrastructure which is of common interest of at least two EU member countries, or is important for a specific EU country member, but is located in another country, also an EU member [13]. Across countries in the regions of SEE and Western Balkans, initiatives and, in particular, legal frames in terms of protecting CEI, are unequally developed. An indicative case in the region with regards to CEI development and relevant legal frames is the former SFR of Yugoslavia. Due to political and war conflicts in the beginning of 1990s, once highly coordinated operations and systemic planning were decomposed into a separate parts within separate newly emerging countries. The infrastructure in each republic proved unable to support current energy needs without new investments or import from the neighbouring countries. Within the YUGEL (Yugoslav Association of Electric Power Industry) pool, the internal

exchange of electricity in SFR of Yugoslavia in 1990 was four times more intensive than the exchange with foreign countries. In the same year Serbia and Bosnia & Herzegovina were net-exporters, Croatia and Montenegro were net-importers, while Slovenia and Macedonia were almost self-sufficient [14].

In the past decades, the situation in the new established countries concerning critical energy infrastructure became quite different, depending on their economic strength, political stability as well as the governance quality. As a EU member state, via identifying and defining national and European CEI, related CEI sectors, their management, preparation of studies on risk analyses, as well as appropriate designation of the stakeholders roles and responsibilities, Croatia transposed the Council’s Directive into "Law on critical infrastructures" [15].

Similarly, in 2011, Bulgaria completed several crucial tasks in terms of transposing requirements of the Council’s Directive onto the national legislation. Moreover, Bulgaria adopted the New National Security Strategy, whereby, for the first time, a chapter on Energy Security and Policy was included [16].

Although not yet a member state, the Serbian Government adopted a “Regulation for protection and rescue’s preparation in emergency situations” based on the “Law on emergency situations”. This document denotes pioneering introduction of the term “critical infrastructure” in the Serbian legislation. However, detailed explanation of type or elements referring to critical infrastructure was neither provided nor included. Taking in consideration that the country had been affected by the turmoil of conflicts resulting, one side, in physical damage of vital infrastructure elements, as well as in increasing vulnerability of energy facilities, from the other, the National Security Strategy noted certain crucial parts of the “critical infrastructure”, although not elaborated in details. A particular focus has been provided on the context of economic development [17].

Keeping the pace with the new paradigm regarding the international world order and the fragile security environment, Republic of Macedonia, as well, initiated providing a challenging driver for developing corporate protection of the critical infrastructure, in particular the CEI. There are several specific reasons that amplified the necessity for actions in this field:

− Firstly, the absence of values that were expected to endorse private sector in the security area and the inexperience in new decentralized security management.

− Secondly, the fact that the country involvement in the military operations in Afghanistan and Iraq, as well as the latest events related to the Middle East refugee’s route, significantly increased

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security threats to the critical infrastructure in the Republic of Macedonia [18].

− Thirdly, no legal document exist in Macedonia that contains a list of identified critical energy infrastructure. Nevertheless, based on the “Law on Crisis Management” [19] and the “Energy Law” [20], (Art. 13, 154, 179), yet Macedonian authorities prepared the “Regulation for criteria and conditions in proclaiming electricity supply crisis”, and the “Regulation for criteria and conditions in proclaiming natural gas supply crisis” [21].

Hence, it can be concluded that currently Macedonia does not have a specific strategy for CEI. Thus, there is an urgent need to define the elements of the national CEI, and to further assess risks based on relevant indicators. The North Atlantic Treaty Organization (NATO) – based approach regarding CEI is followed by most of the EU members [22]. Since, Macedonia is on the path towards Euro-Atlantic integration, a similar choice of route should certainly be followed [18].

3. Risk assessment indicators for Critical

Energy Infrastructure Critical energy infrastructures are vulnerable to cascading failures/threats both from a natural origin, as well as from system failures [23]. Since, asymmetric threats are the focus of this paper, system failures

including: sabotages and terrorism, equipment breakdowns and human errors, are regarded herein. Over the last years, the words “asymmetry” and “asymmetric” have often been used in the discourse of national strategic and political sciences. As pointed out by Blank (2003) [24], asymmetric threats generally include terrorism, unconventional or guerrilla tactics or guerrilla warfare, the use of Weapon for Massive Destruction (WMD), cyber warfare or information war (IW). On a strategic level, “asymmetric” denotes the capability to act, organize and think differently compared to one’s opponents in order to maximize one’s own advantages, use enemy weaknesses, attain initiative, or obtain more freedom of action. According to Burgherr et al. (2008) [25], and Hirschberg et al. (2008) [26], risk relevant criteria and indicators are assigned to all three dimensions of sustainability [27, 28]. Nevertheless, the devastation and consequences can be similar, regardless the cause of the event [2].

Asymmetrical threats are the newest energy security threats emerging during the 1990’s, while dominating this century. They deserve special attention due to several reasons, among which the following can be pointed out: highly developed means of destruction and highly developed national infrastructures [29].

Vulnerability assessment is an important part of the risk assessment process (Figure 2). It enables analysing the system’s elements and their failure modes based on a given set of identified threats [30]. Today, the vulnerability of the CEI is not only a matter of a bulk

Figure 2. The risk assessment process [30]

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power electric system or a physical system. It is significantly more a matter of cyber security, since without SCADA/EMS an energy system could not be efficiently operated and governed. [31] As clearly shown on Figure 1, the interrelation between energy infrastructure and the communication sector is significant. As there are numerous definitions for terrorism, there are a proportionally various definitions for “cyber terrorism”. “Cyber terrorism is generally defined as attacks and threats of attack against computers, networks, and the information stored therein when done to threaten a government or its people in persisting of their political or social objectives” [32,33]. In addition, when it is discussed about the energy dependent country the problem becomes even more complex and implies a wider economic and energy security impact. Every energy system that is dependent on a single fuel supply source, a single transmission line or even a single telecommunication system is more vulnerable than one that relies on a supply diversification and connections redundancy. This implies that solid and stable energy system should be planned and operated in a manner that achieves resiliency by means of diversity and redundancy. Identifying relevant indicators is the first step which is followed by calculating relative importance (weight) of each indicator and finally results in selecting the optimal scenario for risk mitigation by means of various decision making methods including Multi Criteria Decision Making (MCDM).[1, 34].

Bearing in mind the afore mentioned, while considering all herein elaborated aspects applied on the Macedonian case, Figure 3 provides a schematic representation of the identified interrelations between the CEI elements of the Macedonian energy sector from a vulnerability and threats assessment point of view.

Natural hazards are not taken in consideration. Having in consideration the feature and specifics of the Macedonian energy sector, Table 1 provides an overview of some of the identified CEI related risk indicators.

In terms of energy system’s sovereignty although the main threats are recognized in sabotage and terrorism, the political and economic stability as well as political embargoes and availability of domestic energy sources/energy dependency, plays an important role [37]. While infrastructure’s robustness is related with failures and obsolescence of the system, its resilience is defined as the ability to withstand disruptions [1]. The both are very important issues, especially when analysing risks in the countries with fragile and quite vulnerable and import dependent energy system. Lack of maintenance, human errors (manmade accidents) and corruption can also have significant impacts leading to failure of the CEI. The probability of failure will vary

depending on the nature of the disturbance and the nature of the CEI. Hence, design faults, lack of maintenance of inadequate maintenance, long service etc., will influence the occurrence of the failure and its scale. Thus, organizational and management strength/weakness can also significantly affect this issue [12]. Regarding the third indicator “terror potential” there are several elements which are introduced. “Attractiveness of the target” is one of the most important elements, and according to the available analysis [30] it is assumed that the main goal of terrorist attacks is to cause as many fatalities as possible. This indicator is graded from 1 to 10, whereby the value is larger if the target is more attractive, e.g. nuclear technologies have maximum value. In terms of pulverised coal thermal power plants, the values is 1 or 2, thus they are the least attractive targets together with photovoltaics, solar thermal and offshore wind. CCHPP are in the range 2-6 depending on the technology type [27]. Figure 4 indicates the globally increasing trend of the attractiveness of energy infrastructure as a target.

Although a lot of research in analysing CEI disruptions is focused on prevention and protection, most of the recent work is oriented towards “readiness, timely response and fast recovery” from such failures [39]. Due to the fact that there is a lack of statistical data for such failures, empirical data reported by the media can also be used as a solid base [40].

Since the Macedonian energy infrastructure has not yet been a target of terrorist attacks, only examples of energy supply disruption can be pointed out – one as a result of geopolitics and the other as a result of human errors and equipment breakdown.

The partial collapse of the electricity system in SEE on July 24th 2007, is the most severe incident since the region of SEE has been connected to the European electricity power system [41]. As a result, also in Macedonia a serious power blackout of the national power system occurred. Neighbouring power systems in Albania and Kosovo as well experienced the consequences of this blackout, while there was a partial blackout in Montenegro and Serbia [42]. This incident was denoted as a typical frequency disturbance of the system. Under the provoked circumstances, Albania had imported more than 50% from the electricity demand, two 400kV transmission lines (Kosovo B- Nis and Kosovo B- Ribarevina) were facing simultaneous disruption due to human error, while the 400 kV transmission line Blagoevgrad – Thessalonica had a disruption due to overload [41].

In January 2009, the interruption of gas delivery via Ukraine resulting from a bilateral dispute between Russia and Ukraine escalated into a serious gas supply

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Figure 4. Number of terrorist attacks on energy infrastructure as a share of total attacks (globally) [38]

Figure 5. Impact of Ukrainian gas crisis on individual countries [44] crisis in Europe. Significant number of countries in Europe were seriously affected (Figure 5) and suffered various losses. Boltz (2009) [43] provides a consolidated overview of those losses for each country, while

considering that the “cost of disruption” covers not only losses from industrial production stoppage, but as well losses for providing alternative fuels etc.

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4. Conclusion Identification and protection of critical energy infrastructure is among the key tasks for Macedonia as well as for its neighbouring region. Sovereignty, robustness and resilience are the main pillars of energy security, thus they are important elements in the efforts to withstand the threats, especially those defined as asymmetric threats.

In order to be compatible in actions, national legislation should be prepared in line with the EU Directive on critical infrastructure, whereby designation of roles and responsibilities among the institutions is very important. Cyber security, as well as, communication as a vital infrastructure should be analysed as a subset of critical energy infrastructure, since both are significantly interlinked. In the case of Macedonia, where the country relies on limited number of energy sources (e.g. only one import line for natural gas, originating from only one source, limited reserves of coal, increasing trend of electricity import etc.) and has limited interconnections facilities, the national economy is significantly more exposed to “attacks” causing disruption and failure of any part of the corresponding critical energy infrastructure. As elaborated herein, the history of the energy system disruptions in Macedonia shows dominant influence of its geopolitics (e.g. in terms of TRI relating the gas infrastructure), as well as equipment breakdowns and failures due to transition from one system (part of SFR Yugoslavia) towards being a member of the European electricity system. In order to strengthen the capacities, one of the national priorities in this field should be building-up skills, training the personnel, coordination improvement, solid legislation in terms of CEI and crisis management, as well as, investments in new power-generating facilities, new energy sources (domestic/abroad), equipment redundancy, reliability and more sophisticated systems for governing and protection.

Acronyms and abbreviations CCHPP Combined Cycle Heat and Power Plant CEI Critical energy Infrastructure CNG Compressed Natural Gas EMS Energy Management System EU European Union EC European Commission HPP Hydro Power Plant IW Information War LNG Liquefied Natural Gas MCDM Multi Criteria Decision Making

NATO North Atlantic Treaty Organization SCADA Supervisory Control And Data Acquisition SEE South East Europe SFR Socialist Federal Republic TPP Thermal Power Plant TRI Transit Risk Index WMD Weapons of Mass Destruction YUGEL Yugoslav Association of Electric Power

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