Sumitomo makes first hydropower investment in Vietnam

Sumitomo Corporation has made its first hydropower investment in Vietnam by acquiring a 49% stake in Mekong Electric Power Engineering and Development JSC which owns the 48 MW Dak Di 1 & 2 run-of-river hydropower project in Danang city.

The Japanese giant announced the acquisition in a release on Wednesday. The stake was purchased from the Lao Cai province-based GreenSpark Group, a domestic renewable energy developer.

The company intends to use this investment as a starting point to secure stable renewable energy sources, pursue further acquisitions and development of high-quality hydropower projects in the country, according to the release.

The Dak Di 1 & 2 project, which commenced operations in 2022, is an existing power generation facility with a 20-year power purchase agreement with state utility Vietnam Electricity (EVN).

Via its participation in the project, Sumitomo aims to contribute to securing renewable energy sources and advancing decarbonization in Vietnam, while promoting initiatives in energy transformation, one of the growth areas identified in its current medium-term management plan.

As economic growth continues, Vietnam faces challenges in meeting increasing electricity demand and maintaining grid stability while renewable energy deployment expands, with the target to achieve carbon neutrality by 2050.

Against this backdrop, the Vietnamese government is promoting the expansion of hydropower as a baseload power source. The project contributes to regional energy security and supports Vietnam's decarbonization efforts.

Additionally, by leveraging the emerging Direct Power Purchase Agreement (DPPA) mechanism in Vietnam, Sumitomo is considering the potential to supply sustainable power to its industrial parks and smart cities, further contributing to a carbon-neutral society.

DPPA is a private-sector electricity trading system implemented in 2024. Currently, it is applicable only to solar and onshore wind, but expected to expand to include hydropower and other renewable sources.

Sumitomo's diversified portfolio in Vietnam

In Vietnam, Sumitomo is involved in diverse areas, including industrial parks (IPs), smart urban areas, energy, and transport infrastructure.

The giant has developed Thang Long IP (in Hanoi in 1997); Thang Long II IP (Hung Yen province, 2006) with rooftop solar power development being deployed to serve tenants; Thang Long III IP (Vinh Phuc province, 2015); and Thang Long IV IP (Thanh Hoa province, 2025). The total area of these IPs has exceeded 1,100 hectares.

Earlier this year, representatives of Sumitomo Group worked with leaders of the former Vinh Phuc province, now part of Phu Tho province, to invest in building the second IP in this locality.

In the real estate sector, the Japanese group joined hands with BRG Group to implement the North Hanoi Smart City project in Vinh Thanh commune, Hanoi.

The project has an area of nearly 272 ha and a total investment of $4.2 billion. After many delays, the investor started the project in August 2025 and is expected to complete in the fourth quarter of 2032.

In the energy sector, Sumitomo has invested in the Van Phong 1 thermal power plant in Khanh Hoa province, with a total installed capacity of 1,432 MW and a total investment of $2.58 billion, the largest FDI project ever in the south-central province.

Just over a year after the plant was inaugurated, in early May 2025, the group announced the transfer of 50% of its capital at Van Phong Power Company Limited (VPCL), the owner of this thermal power plant project.

Sumitomo also contributed capital to the Phu My 2.2 thermal power plant project with a capacity of 715 MW, under the BOT model with EDF (France) and TEPCO/JERA. The plant was put into operation in February 2005 and was transferred to EVN in February 2025 under the contract.

In the field of transport infrastructure, in 2012, Sumitomo signed a contract to construct/install a part of Metro Line 1 in Ho Chi Minh City.

In March 2024, Sumitomo signed an MoU with Green and Smart Mobility JSC (GSM) to seek cooperation opportunities in the field of green transportation development.

Accordingly, Sumitomo will study how to take advantage of GSM's customer base, electric vehicle maintenance network, and charging infrastructure in Vietnam, along with its expertise in the mobility business, to rapidly expand the electric mobility ecosystem.