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 2025, 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 | ₹10,385 Cr |
| 2. SBI Energy Opportunities Fund Direct - Growth | ₹10,305.10 Cr |
| 3. DSP Natural Resources and New Energy Fund Direct - Growth | ₹1,227.15 Cr |
| 4. Tata Resources & Energy Fund Direct - Growth | ₹1,080.42 Cr |
| 5. Baroda BNP Paribas Energy Opportunities Fund Direct - Growth | ₹750.07 Cr |
| 6. Kotak Energy Opportunities Fund Direct - Growth | ₹171.34 Cr |
| 7. ICICI Prudential Strategic Metal and Energy Equity FoF Fund Direct - Growth | ₹90.09 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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 2025 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 2025 stands out:
These trends are creating a unique opportunity where profit meets purpose — making 2025 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 2025, 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).
As India accelerates its shift toward clean and sustainable power, green energy mutual funds have emerged as a smart, future-ready investment option. These funds offer a perfect balance of potential returns and environmental impact, making them ideal for long-term investors who believe in the renewable energy story. With rising AUM, strong government backing, and growing global interest in ESG investing, now is the right time to diversify your portfolio with renewable energy mutual funds.
A green energy fund is a type of mutual fund that invests primarily in companies involved in renewable energy sources such as solar, wind, hydropower, and clean technology. These funds are designed to support sustainability while offering long-term capital growth opportunities.
While individual preferences vary, stocks like Adani Green Energy, Tata Power Renewable, and ReNew Power are often considered leading players in India’s green energy space. However, it's safer for most investors to access these through green energy mutual funds, which offer diversification and professional management.
Some of the top-performing mutual funds focused on green or renewable energy include ICICI Prudential Energy Opportunities Fund, SBI Energy Opportunities Fund, and DSP Natural Resources and New Energy Fund. These are considered among the best green energy mutual funds in India due to their strong AUM, experienced fund managers, and sector-specific focus.
Returns in green energy mutual funds are calculated based on the change in the fund’s Net Asset Value (NAV). For SIP investments, XIRR is used to measure performance over time. Long-term returns are generally calculated using CAGR, which shows compounded annual growth.
As per the 2024 Budget, if you sell your green energy mutual fund units within one year, the profits will be taxed as Short-Term Capital Gains (STCG) at 20%. If you hold them for more than one year, Long-Term Capital Gains (LTCG) tax applies at 12.5%. It’s always smart to plan your holding period accordingly to reduce tax liability.
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.
