  To reduce greenhouse gas emissions, many countries plan to massively expand
wind power and solar photovoltaic capacities. These variable renewable energy
sources require additional flexibility in the power sector. Both geographical
balancing enabled by interconnection and electricity storage can provide such
flexibility. In a 100% renewable energy scenario of twelve central European
countries, we investigate how geographical balancing between countries reduces
the need for electricity storage. Our principal contribution is to separate and
quantify the different factors at play. Applying a capacity expansion model and
a factorization method, we disentangle the effect of interconnection on optimal
storage capacities through distinct factors: differences in countries' solar PV
and wind power availability patterns, load profiles, as well as hydropower and
bioenergy capacity portfolios. Results show that interconnection reduces
storage needs by around 30% in contrast to a scenario without interconnection.
Differences in wind power profiles between countries explain around 80% of that
effect.
