Virtual Power Plants in Modern Power Systems: A Comprehensive Review of Uncertainty Management and Market Bidding Strategies

Virtual Power Plants (VPPs) represent a transformative approach in modern power systems by aggregating distributed energy resources (DERs) such as solar panels, wind turbines, battery storage, and controllable loads into a unified, controllable entity. This aggregation enables enhanced grid flexibility, optimized resource utilization, and economic efficiency. Despite their potential, VPP deployment is constrained by renewable generation uncertainty and the complexity of operating in competitive electricity markets. This paper presents a comprehensive review of VPP operational architectures, functional components, and market interaction mechanisms, with a particular focus on uncertainty arising from renewable energy variability and demand forecasting errors. Recent advances in uncertainty modelling and mitigation including statistical forecasting, scenario-based methods, robust optimization, and stochastic control are systematically examined. In addition, the paper reviews contemporary VPP bidding strategies and evaluates their adaptability and performance under uncertain market conditions. The analysis identifies key research gaps, notably the limited treatment of multi-timescale uncertainties and the weak coupling between market bidding and real-time operational control. By synthesizing current trends and methodological limitations, this review provides a structured perspective to support the development of resilient, intelligent, and market-compliant VPP frameworks for future decentralized and renewable-intensive power systems.