India’s energy needs are growing fast, and at the same time, there’s a serious push to move away from coal and fossil fuels. This shift has created new opportunities for investors who want to support clean power sources like solar, wind, and hydro. That’s where green energy mutual funds come in — they focus on companies building the future of clean energy, while offering long-term growth potential for investors.
As more people look for ways to invest in industries that are both profitable and sustainable, green energy mutual funds are gaining attention. In this blog, we’ll explore how these funds work, which ones are performing well in 2026, and how Indian investors can get started without overcomplicating things.
Listed below are the top-performing funds in India based on Assets Under Management (AUM) — a key indicator of fund popularity and trust among investors.
| Green Energy Mutual Funds in India | AUM (₹ Crores) |
| 1. ICICI Prudential Energy Opportunities Fund Direct - Growth | ₹9,828.30 Cr |
| 2. SBI Energy Opportunities Fund Direct - Growth | ₹9,128.58 Cr |
| 3. DSP Natural Resources and New Energy Fund Direct - Growth | ₹1,572.72 Cr |
| 4. Tata Resources & Energy Fund Direct - Growth | ₹1,222.10 Cr |
| 5. Baroda BNP Paribas Energy Opportunities Fund Direct - Growth | ₹717.52 Cr |
| 6. Kotak Energy Opportunities Fund Direct - Growth | ₹265.39 Cr |
| 7.ICICI Prudential Strategic Metal and Energy Equity FoF Fund Direct - Growth | ₹128.01 Cr |
These funds focus on sectors like renewable energy, natural resources, and energy innovation, offering exposure to India’s clean power future.
These mutual funds focus on sectors like renewable energy, clean technology, and energy infrastructure — areas that are expected to see massive growth in the coming years. Here’s a quick look at some of the best green energy mutual funds available in India:
Launched in 2024, this fund focuses on companies shaping India’s energy future, including those in renewable and clean energy sectors. With the highest AUM in this category, it's quickly becoming a favorite among investors looking for exposure to green energy mutual funds. Its balanced portfolio and efficient cost structure make it a strong option for long-term investors. This fund is strategically positioned to benefit from the Union Budget 2026 focus on Railway Capex of ₹2.75 - ₹2.8 Trillion, which drives massive demand for industrial electrification.
Key Details:
This is a powerful addition to the space of renewable energy mutual funds in India, backed by SBI’s trusted fund management. It targets clean and traditional energy firms, with strong short-term performance and growing investor interest. Its slightly higher exit load suggests a strategy suited for long-term holding.The accelerated Kavach Safety System rollout announced in the latest budget is expected to provide significant tailwinds for the energy-heavy infrastructure firms in this portfolio..
Key Details:
This fund has a legacy in the natural resources and green energy space, combining traditional commodities with emerging renewable tech. Though its recent returns are modest, it offers diversification across energy types, making it a conservative entry point for renewable energy-focused investors. As the government pushes for 100% electrification of the broad-gauge network, the natural resources and metals held by this fund remain vital for new power transmission corridors.
Key Details:
Managed by one of India’s most trusted business groups, this fund blends resource and energy-based investments including green energy companies. It’s ideal for investors seeking a mix of steady growth and exposure to clean power assets within a broader energy theme.With the Union Budget 2026 prioritizing decongestion and track doubling, Tata’s infrastructure-aligned holdings are set to witness stable revenue visibility.
Key Details:
A new entrant launched in 2025, this fund aims to capture growth in India's clean and renewable energy space, targeting futuristic companies in solar, wind, and energy infrastructure. With a low entry barrier and fresh NAV, it’s gaining traction among new investors looking for green energy mutual fund options.The focus on advanced signaling systems in the FY26 budget complements this fund's objective of investing in energy-efficient transportation and logistics.
Key Details:
This low-cost fund is ideal for first-time investors looking to enter the renewable energy mutual fund market. Though it's new, its focus on next-gen energy companies makes it a promising choice for the future. The ₹100 minimum investment also makes it very beginner-friendly. The planned ₹2.8 Trillion capex for railways acts as a strong signal of commitment for the new-age technology suppliers that form part of this fund’s thematic focus.
Key Details:
This fund offers a unique blend of strategic metals and energy themes, including renewable energy exposure through a fund-of-funds (FoF) structure. It’s suitable for investors looking to diversify beyond just power or clean energy, with global and local asset allocation. Strategic metals are a core component of the electronic backbone required for the massive Kavach rollout, making this fund a unique play on 2026 rail safety upgrades.
Key Details:
Green energy mutual funds are investment funds that focus only on companies involved in clean and renewable energy. These can include sectors like solar power, wind energy, hydropower, electric vehicles, and clean battery technologies. Instead of investing in oil, coal, or gas-related firms, these funds put your money into businesses that are working to reduce pollution and fight climate change.
For example, many green energy mutual funds invest in companies such as Adani Green Energy, ReNew Power, and NTPC’s renewable arm. Globally, the renewable energy market is expected to grow by over 8% annually between 2024 and 2030, and India is a key player in this shift. In fact, India aims to reach 500 GW of renewable energy capacity by 2030, which opens up long-term opportunities for investors.
*The Union Budget 2026's emphasis on green corridors ensures that the power evacuation infrastructure remains a top priority for the companies in this segment.
Before green energy mutual funds gained traction, power sector mutual funds in India were already popular among investors looking to tap into the country’s electricity and infrastructure growth. These funds usually invest in companies involved in the generation, transmission, and distribution of electricity, including big names like Power Grid Corporation, NTPC, Tata Power, and Reliance Infrastructure.
However, these funds often have a large portion of their investments in thermal power or fossil-fuel-based utilities, which means they carry exposure to carbon-intensive industries. This makes them more vulnerable to policy changes, environmental regulations, and global ESG trends.
The twist? Some traditional power sector funds are now slowly adapting, adding renewable companies into their portfolio mix. But still, most power sector mutual funds aren’t fully aligned with the clean energy transition. They may offer stable dividends and moderate growth, but they lack the future-focused vision that energy mutual funds bring to the table.
The year 2026 is expected to be a major turning point for India’s energy sector — especially for renewable energy investments. With strong government support, rising climate awareness, and major global funding flowing into clean energy, investors are getting serious about the long-term growth of this sector.
Here’s why 2026 stands out:
These trends are creating a unique opportunity where profit meets purpose — making 2026 a year where clean energy investing becomes mainstream for Indian investors.
Choosing the right mutual fund is key to getting solid returns while supporting India’s clean energy mission. Here’s how you can pick the best green energy mutual funds for your investment goals:
One of the easiest and most investor-friendly ways to begin is through Lakshmishree, a rising stockbroker platform that gives direct access to mutual funds.
With Lakshmishree, you're not just investing — you're getting access to expert-backed insights and a platform built for smooth, hassle-free mutual fund investments.
With India's focus on renewable energy growing stronger in 2026, these funds give investors a chance to support the transition to a greener economy while building their own wealth.
Returns in green energy mutual funds are calculated just like any other mutual fund — by tracking the change in the fund’s Net Asset Value (NAV) over time. But since these funds invest in a specific theme (renewable energy), the performance also depends on how well the clean energy sector performs in the market.
Here’s how it works in simple terms:
So, while past returns give an idea, remember that green energy mutual funds are market-linked, and returns can go up or down. That’s why long-term holding and SIP investing are recommended.
When you earn profits from selling your mutual fund units, those gains are taxable. As per the Union Budget 2024, the tax rules for renewable energy mutual funds (mostly equity or hybrid equity funds) have been updated.
Here’s a simple breakdown:
Example: If you invest ₹1 lakh in a green energy fund and make ₹20,000 profit in 14 months, you’ll pay ₹2,500 as LTCG tax (12.5% of ₹20,000).
India's green energy sector has achieved "operational maturity" by January 2026, driven by capacity growth, improved discom finances, and a massive ₹2.8 trillion government infrastructure investment. Green energy mutual funds demonstrate resilience through strategic diversification. While transmission gridlock and land acquisition persist, targeted budgetary support mitigates risks. For 2026 investors, "Grid Reliability" and "System Integration" are key alpha drivers, supported by structural tailwinds like the Draft National Electricity Policy 2026 targets and Indian Railways' electrification. The convergence of "profit and purpose" solidifies the exceptional outlook for green energy mutual funds.
As of January 2026, the top-performing funds by Assets Under Management (AUM) are the ICICI Prudential Energy Opportunities Fund (₹9,828.30 Cr) and the SBI Energy Opportunities Fund (₹9,128.58 Cr). For investors seeking high trailing returns, the DSP Natural Resources and New Energy Fund has delivered a 1-year return of 28.30% as of late January 2026.
The Union Budget 2026-27 has earmarked a massive capital expenditure (Capex) of ₹2.75 trillion to ₹2.8 trillion for Indian Railways. This 10-12% increase in allocation is a significant driver for energy stocks, particularly those involved in industrial electrification, track doubling, and the expansion of the Kavach safety system.
By January 2026, the Kavach Version 4.0 has been successfully commissioned on approximately 738 route km, with a major focus on the Delhi-Mumbai and Delhi-Howrah corridors. The government has invited bids for equipping an additional 9,069 locomotives, creating a robust order pipeline for technology and energy equipment suppliers.
Equity-oriented green energy funds are subject to the following tax rules:
Short-Term Capital Gains (STCG): 20% if units are sold within one year of investment.
Long-Term Capital Gains (LTCG): 12.5% for gains exceeding ₹1.25 lakh in a financial year, provided the units are held for more than 12 months.
India has officially achieved the milestone of having over 50% of its cumulative installed power capacity from non-fossil fuel sources by early 2026, reaching the 500 GW mark five years ahead of the initial 2030 target. In the 2025 calendar year alone, India added a record-breaking 44.5 GW of renewable capacity.
Thematic energy funds are classified as "Very High Risk" because they lack the sector diversification of regular equity funds. They are highly sensitive to government policy shifts, infrastructure evacuation constraints, and the rising costs of energy storage systems like BESS. Analysts suggest an investment horizon of 7+ years to navigate the volatility of this sector.
Disclaimer: This article is intended for educational purposes only. Please note that the data related to the mentioned companies may change over time. The securities referenced are provided as examples and should not be considered as recommendations.
