Mr Turnbull says the fund will be set up in July, and will be jointly managed by the Clean Energy Finance Corporation and Australian Renewable Energy Agency - two bodies that Mr Abbott had pledged to abolish.
Environment Minister Greg Hunt says the fund will help achieve Australia's ultimate aim of reducing emissions to zero.
"This will be investing in storage, in new battery technology, in smart grids, in some of the exciting solar visions that people have hoped for and imagined for Australia but which are only now really becoming reality."
Opposition leader Bill Shorten has called the initiative "window dressing", accusing Mr Turnbull of only trying to distance himself from Mr Abbott.
And Greens leader Richard Di Natale says it still doesn't make up for past cuts.
"He's used a tricky political manouevre to actually gut funding for the Australian renewable energy agency to change its mandate to stop it driving innovation that's necessary, and then expects those of us who care deeply about the nation's response to global warming to pat them on the back. Well, no."
