HP High Court: Central Agency Holds Exclusive Power for Renewable Energy Certificate Eligibility

Shimla, HP – In a significant ruling that clarifies the division of regulatory powers in India's renewable energy sector, the Himachal Pradesh High Court has unequivocally held that State-level agencies lack the jurisdiction to reject applications for accreditation under the Renewable Energy Certificate (REC) mechanism. The Court determined that such decisions on eligibility fall within the exclusive domain of the Central Agency designated by the Central Electricity Regulatory Commission (CERC).

The judgment, delivered by Justice Ajay Mohan Goel in the case of M/s Greenko Astha Projects (India) Hydro Power Pvt. Limited v/s Directorate of Energy , sets a crucial precedent for renewable energy producers nationwide. It curtails the discretionary power of state bodies and reinforces the centralized framework established by the CERC for promoting green energy. The Court quashed an order by the Himachal Pradesh Directorate of Energy, directing it to reconsider the petitioner's application strictly within the procedural confines of its role.

Background of the Dispute

The case originated from an application filed by M/s Greenko Astha Projects (India) Hydro Power Pvt. Ltd., which operates a hydroelectric project in Chamba district that became commercially operative in 2004. Following the introduction of the CERC's (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations in 2010, the company sought accreditation to benefit from the REC scheme.

The REC mechanism is a market-based instrument designed to promote renewable energy and facilitate compliance with Renewable Purchase Obligations (RPOs) for various entities. Eligible green energy producers can earn and trade these certificates on power exchanges.

Greenko Astha Projects submitted its application for accreditation to the designated State Agency, the Directorate of Energy, Himachal Pradesh. However, the Directorate rejected the application. The basis for rejection was its interpretation of Clause 5(1)(c) of the 2010 Regulations, which stipulates conditions for eligibility. The Directorate concluded that because the petitioner had an existing Power Purchase Agreement (PPA), it was ineligible to receive RECs.

This rejection formed the crux of the legal challenge. The petitioner argued that the State Agency had fundamentally misunderstood its role, contending that its authority was limited to procedural verification and forwarding the application. The substantive decision-making power to grant or deny accreditation, the petitioner asserted, rested solely with the Central Agency.

The Court's Jurisdictional Analysis

Justice Ajay Mohan Goel’s bench meticulously analyzed the architecture of the 2010 Regulations to delineate the distinct roles of the State and Central agencies. The Court found that the State Agency had ventured beyond its statutory mandate by adjudicating on the petitioner's eligibility—a function explicitly reserved for the Central Agency.

In a key observation, Justice Goel remarked, “Whether or not a generating company engaged in generation of electricity from renewable energy sources is eligible to apply for registration… has to be decided by the Central Agency and not by the State Agency.”

The Court underscored that the State Agency’s role, as defined by Regulations 2, 3, and 5, is primarily procedural. It is tasked with verifying the completeness of applications, conducting site visits if necessary, and then forwarding its recommendation to the Central Agency. It does not possess the authority to issue a final verdict on eligibility based on a substantive interpretation of the regulations.

Further dissecting the regulatory text, the Court pointed out the definition of a "Certificate" within the regulations: “‘Certificate' means the renewable energy certificate issued by the Central Agency in accordance with the procedures laid down by it and under the provisions specified in said Regulations.” This definition, the Court noted, inherently links the issuance and the governing procedures directly to the Central Agency, leaving no room for interpretive ambiguity regarding the ultimate decision-maker.

The judgment also highlighted that the Directorate of Energy had erroneously relied on Regulation 5(1), which outlines the conditions for eligibility. The Court clarified that this provision serves as a guideline for the Central Agency when it makes its determination, not as a tool for the State Agency to preemptively reject applications.

Implications for the Renewable Energy Sector

This ruling provides much-needed legal certainty for renewable energy developers and operators across India. It streamlines the accreditation process by confirming a single, national-level authority for eligibility decisions, thereby preventing a patchwork of varying interpretations by different state agencies.

1. Reinforcement of Federal Regulatory Structure: The decision strongly affirms the CERC's framework, which envisions a uniform and centralized process for REC accreditation. It prevents potential administrative overreach by state bodies and ensures that the national policy objectives of the REC mechanism are not diluted by localized interpretations.
   
   
2. Clarity for Project Developers: Developers can now proceed with greater confidence, knowing that their eligibility will be assessed by the Central Agency based on a consistent application of the regulations. This reduces regulatory risk and potential for arbitrary rejections at the state level, which could otherwise stall projects and deter investment in the sector.
   
   
3. Guidance for State Agencies: The judgment serves as a clear directive to all state-level energy directorates and designated agencies. Their role is confined to that of a facilitator and preliminary verifier, not an adjudicator. They must forward applications with their recommendations rather than issuing dispositive orders.

By setting aside the Directorate's rejection order, the Himachal Pradesh High Court has not only provided relief to the petitioner but has also reinforced the principles of administrative law concerning jurisdictional limits. The decision underscores that a statutory body cannot assume powers that have not been explicitly conferred upon it.

The Court has remanded the matter back to the Directorate of Energy with a clear instruction: to reconsider the petitioner's application in strict accordance with the accreditation procedure outlined in the CERC regulations and forward it to the Central Agency for a final decision on its merits.

Case Details:

* Case Name: M/s Greenko Astha Projects (India) Hydro Power Pvt. Limited v/s Directorate of Energy, State Agency, Himachal Pradesh

* Case No.: CWP No. 5752 of 2020

* Date of Decision: October 9, 2025

* Counsel for Petitioner: Mr. Rajnish Maniktala, Senior Advocate, with Mr. Dinkar Bhaskar, Advocate

* Counsel for Respondent: Mr. Pushpinder Jaswal, Additional Advocate General, with Mr. Rajat Chauhan, Assistant Advocate General