Evolutionary Game Theory-Based Analysis of Power Producers’ Carbon Emission Reduction Strategies and Multi-Group Bidding Dynamics in the Low-Carbon Electricity Market

China’s power generation system has undergone reforms, leading to a competitive electricity market where independent producers participate through competitive bidding. With the rise of low-carbon policies, producers must optimize bidding strategies while reducing carbon emissions, creating complex interactions with local governments. Evolutionary game theory (EGT) is well-suited to analyze these dynamics. This study begins by summarizing the fundamental concepts of electricity trading markets, including transaction models, bidding mechanisms, and carbon reduction strategies. Existing research on the application of evolutionary game theory in power markets is reviewed, with a focus on theoretical constructs such as evolutionary stable strategies and replicator dynamics. Based on this foundation, the study conducts a detailed mathematical analysis of symmetric and asymmetric two-group evolutionary game models in general market scenarios. Building upon these models, a three-group evolutionary game framework is developed to analyze interactions within power producer groups and between producers and regulators under low-carbon mechanisms. A core innovation of this study is the incorporation of a case study based on China’s electricity market, which examines the evolutionary dynamics between local governments and power producers regarding carbon reduction strategies. This includes analyzing how regulatory incentives, market-clearing prices, and demand-side factors influence producers’ bidding and emission reduction behaviors. The study also provides a detailed analysis of the bidding strategies for small, medium, and large power producers, revealing the significant impact of carbon pricing and market-clearing prices on strategic decision-making. Specifically, the study finds that small producers tend to adopt more conservative bidding strategies, aligning closely with market-clearing prices, while large producers take advantage of economies of scale, adjusting their strategies at higher capacities. The study explores the conditions under which carbon emission reduction strategies achieve stable equilibrium, as well as the implications of these equilibria for both market efficiency and environmental sustainability. The study reveals that integrating carbon reduction strategies into power market dynamics significantly impacts bidding behaviors and long-term market stability, especially under the influence of governmental penalties and incentives. The findings provide actionable insights for both power producers and policymakers, contributing to the advancement of low-carbon market theories and supporting the global transition to sustainable energy systems.