State Energy Directorate Can’t Reject Accreditation for Renewable Energy Certificates, Only Central Agency Has Authority: HPHC

Summary

In a significant decision, the Himachal Pradesh High Court in Greenko Astha Projects (India) Hydro Power Pvt. Ltd. v. Directorate of Energy, State Agency, Himachal Pradesh (CWP No. 5752 of 2020) held that the State’s Directorate of Energy (State Agency) did not have jurisdiction to reject an application for accreditation under the Renewable Energy Certificate (REC) mechanism. Instead, the Court reaffirmed that the authority to determine eligibility and issue RECs lies exclusively with the Central Agency designated under the Central Electricity Regulatory Commission (CERC) (Terms and Conditions for Recognition and Issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010. The Court set aside the State Agency’s order and directed a fresh consideration in accordance with the accreditation procedure.

Issues Raised

The core question before the Court was: Whether the State Agency (Directorate of Energy, Himachal Pradesh) has the jurisdiction to reject accreditation applications under the REC mechanism, or whether that power lies exclusively with the Central Agency designated under the CERC Regulations, 2010.
Specifically:
Does the State Agency have authority to decide eligibility of a renewable generating company (here, a hydro project from 2004) for registration and accreditation under the REC mechanism?
Is the rejection valid on the ground of having a PPA dated 2004 at fixed price vs. eligibility under Clause 5(1)(c) of the Regulations?
What is the proper role of the State Agency vs. the Central Agency under the 2010 Regulations?

Parties’ Arguments

For the Petitioner (Greenko):

The petitioner argued that the State Agency simply had a procedural role (verification of documents) under the 2010 Regulations (Regulations 2, 3 and 5), and that the ultimate decision on accreditation and issuance of RECs lies with the Central Agency as designated by CERC.
The State Agency’s rejection on the ground of the PPA did not vest the State Agency with competence to apply Clause 5(1)(c) and reject the application – it was not its decision-making domain.
The definition of “Certificate” in the 2010 Regulations refers to “renewable energy certificate issued by the Central Agency” under the procedures laid down.

For the Respondent (Directorate of Energy / State Agency):

The State Agency contended that the project was not eligible under Clause 5(1)(c) of the 2010 Regulations because the generating company already had a PPA (dated 2004) for sale of power at a fixed price to HPSEB, and thus did not satisfy the condition of selling electricity to the distribution licensee at the ‘average pooled power cost’ (APPC) as required.
Therefore, the State Agency held that they were justified in rejecting the accreditation application on regulatory grounds.

Judgment

The HPHC held that:

The 2010 Regulations clearly designate that the Central Agency, and not the State Agency, has the authority to determine whether a generating company is eligible for registration and issuance of RECs.
The State Agency exceeded its jurisdiction in rejecting the accreditation application. The State Agency’s role is limited to processing and forwarding applications in accordance with the procedure; it cannot itself decide eligibility or issue RECs.

Regulation 5(1) of the 2010 Regulations applies to the Central Agency’s registration decisions, not for the State Agency to apply independently. The State Agency’s reliance on Clause 5(1)(c) was misplaced.
Consequently, the impugned order of the Directorate of Energy rejecting the accreditation application is set aside. The Court directed the State Agency to reconsider the application of the petitioner in accordance with the accreditation procedure laid out under the 2010 Regulations.

Analysis

This decision is important from an energy-regulation perspective for several reasons:

Clarification of jurisdictional boundaries

The Court has reaffirmed the centralised regulatory architecture envisioned under the 2010 REC Regulations. While States have a role (via State Agencies) in facilitation and processing, the substantive decision-making power remains with the Central Agency designated under CERC. For stakeholders (developers, consultants, lawyers) it highlights that State Agencies cannot substitute or override the central regulatory process.

Practical implications for renewable energy projects

Renewable generators seeking accreditation under the REC mechanism should ensure that their application is evaluated by the Central Agency, and that State-level rejections on eligibility grounds (such as PPA terms, APPC criteria) may be vulnerable if State Agency lacks jurisdiction. In this case, the PPA dating from 2004 (prior to the 2010 Regulations) and fixed price did not per se justify a State-level rejection.

Compliance-risk for State regulatory/administrative agencies

The judgment signals that State regulatory bodies must be cautious not to assume decision-making roles beyond their delegated functions. The regulatory regime envisages separation of verification vs. decision-making. A State Agency stepping into deciding eligibility may incur legal invalidation of its orders.

Broader significance for REC market and renewable policy

The REC mechanism was introduced by CERC in 2010 to encourage renewable generation by making certificates tradeable and the eligibility criteria uniform across States. The judgment strengthens the uniformity of the regime by emphasising central oversight. It may reduce attempts by State bodies to impose additional eligibility hurdles or reject applications on local policy grounds.

Caveats and future practice

Although the jurisdictional boundary is clarified, developers must still satisfy the substantive eligibility criteria under Regulation 5 (e.g., sale to distribution licensee, APPC rate, commissioning date etc). The State Agency may still play a role in verifying facts.
The actual workings of the Central Agency (its procedures, timelines, transparency) become even more important for developers. Practitioners will need to monitor how the designated Central Agency interprets eligibility criteria (for example, the meaning of “average pooled power cost of power purchased by such distribution licensee”).

The decision arises in the context of a hydro project (commissioned 2004) and with fixed PPA; whether similar reasoning applies in other technology categories or project-timing scenarios remains to be seen.
Given evolving regulatory regimes (e.g., long-duration storage, hybrid RE + storage, green hydrogen), the decision is also a reminder of the importance of confirming which regulatory instrument applies and which agency has authority.

Relevance for legal practitioners and stakeholders

For legal advisors, regulatory consultants and project developers:

Examine whether accreditation or registration applications are being erroneously rejected at State level when the statute/regulations vest decision-making with the Central Agency.
Include in due diligence check-lists the question of which agency has decision-making power under the relevant regulatory instrument.
Anticipate challenges and litigation risk if State Agencies override the central regulatory scheme.
For compliance tasks: ensure that application materials are filed properly with the Central Agency (or via State Agency only in its procedural role) and the eligibility criteria are clearly addressed.

Conclusion

The HPHC’s judgment in Greenko Astha Projects sets a clarifying precedent that under the 2010 REC Regulations, the power to determine eligibility and issue accreditation/RECs lies with the Central Agency designated by CERC, and not with the State Agency. For renewable energy developers and legal practitioners, this reinforces the centralised nature of the REC mechanism and the need to ensure correct regulatory pathway. The decision may improve regulatory certainty and reduce state-level procedural or substantive rejections, but also places onus on the Central Agency’s process and the applicant’s compliance with eligibility norms.