The work described in this report was performed by the National Renewable Energy Laboratory (NREL) and funded by the Office of the Energy Efficiency and Renewable Energy, U.S. Department of Energy (EERE DOE). This project is a joint project with the Pacific Northwest National Laboratory. This report evaluates the physical characteristics that improve the ability of the power system to absorb variable generation. It then uses evidence from electricity markets in the Eastern Interconnection of the United States to show how large, fast energy markets can help with integration. The concept of Virtual Balancing Area is introduced, a concept that covers a broad range of cooperative measures that can be undertaken by balancing areas to help manage variability.