Abstract
The consumptions of non-renewable energy are inevitably accompanied by human activities that not only pollute and damage the environment, but also exhaust the natural resources and the environment issue is arouse. How to use the policy to promote the usage of renewable energy, it must be systematically studied and established a reasonable fee rate. In this thesis, we attempt to optimize the operations of the government through the decision of a subsidy for renewable energy industry. The hierarchical and interactive nature between the two parties is modeled by bi-level programming (BLP), where the government plays the higher level decision maker while Taipower is the lower level counterpart. Since the objectives of both levels are usually conflict, the BLP model can simulate the actual decision-making process and obtain an optimal solution under an interactive behavior. Furthermore, this study presents a detailed discussion about how to find an efficient compromise solution so that the decision makers can cooperate and achieve satisfactory results. In order to solve the problem by optimization software, the BLP problem is transformed into a single level problem via Karush-Kuhn-Tucker (KKT) optimality conditions and further transformed into a 0-1 mixed integer programming problem by variable substitution. The problem is then solved with real-world data, and the obtained solutions are analyzed. The results suggest that the proposed approach can improve the operations of both the government and the Taipower.