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Utilities brands switching on to power post-Covid recovery

21 April 2022
  • Chinese electric utility brand State Grid is most valuable and strongest utilities brand in the world, valued at US$60.2 billion
  • Renewable energy beginning to power entry of new brands to global top fifty ranking
  • Japanese utilities brands hit by local regulatory changes
  • American utilities brand NRG Energy has electric growth with 156% increase in brand value

View the full Brand Finance Utilities 50 report here

The largest utilities brands in the world are switching-on to a post-COVID future, led by China’s State Grid (brand value up 9% to US$60.2 billion), according to a new report from the world’s leading brand value consultancy, Brand Finance. After a tough 2021 correlated with the pandemic, the utilities sector is powering ahead with the world’s 50 most valuable utilities brands achieving a combined 9% growth this year.

Every year, leading brand valuation consultancy Brand Finance puts 5,000 of the biggest brands to the test, and publishes around 100 reports, ranking brands across all sectors and countries. The utilities industry’s top 50 most valuable and strongest brands in the world are included in the annual Brand Finance Utilities 50 ranking.

State Grid is named the world’s most valuable utilities brand for the fifth time in a row. The brand achieved a brand value growth of 9% year-on-year, valued at US$60.2 billion. As the overwhelmingly dominant utilities company in China, State Grid is a powerful brand which is beginning to consider environmental concerns with a commitment to green energy and net zero carbon emissions for the Winter Olympics 2022.

Richard Haigh, Managing Director of Brand Finance, commented:

“Utilities sector is at the fulcrum of key issues for our society: the recovery from Covid, the conflict in Ukraine, and broader concerns about environmental sustainability in the future. State Grid is obviously a huge brand in a huge market, and will face a challenging future unless they can leverage this brand to deliver for their customers.”

In addition to calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Compliant with ISO 20671, Brand Finance’s assessment of stakeholder equity incorporates original market research data from over 100,000 respondents in more than 35 countries and across nearly 30 sectors. State Grid is also the strongest brand in the ranking with a Brand Strength Index (BSI) score of 86.4 out of 100 and a corresponding brand rating of AAA. State Grid’s brand strength benefits from its extreme size and geographically confined customer base.

Renewable energy beginning to power entry of new brands to global top fifty ranking

With increasing global demand for environmentally sustainable electricity, industry trends in the utilities sector point towards an increased awareness about green and renewable sources of energy.

China’s Huaneng Power International enters the Utilities 50 ranking this year with a brand value of US$2.6 billion. While over 90% of the company’s electricity generation comes from burning gas and coal, the brand has achieved fast growth (from a relatively small base) in its production of electricity from renewable sources.

Similarly, Indonesian utilities brand PLN (brand value doubled this year to US$1.5 billion) aims to digitise their business supply chain to increase efficiency and reduce carbon emissions with its long-term strategy. The brand has established its target to reach 23% renewable energy usage by 2025, but face substantial technical challenges to do so.

The UK energy provider British Gas (brand value up 154% year-on-year, valued at US$1.3 billion) entered the Utilities 50 ranking as the world’s 50th most valuable utilities brand. This growth in brand value was correlated with British Gas increasing the number of residential energy customer numbers for the first time since 2010, largely due to the addition of over 500,000 new customers from collapsing competitors.

Japanese utilities brands hit by local regulatory changes

In Japan, energy companies face tough local regulations on the procurement of liquified petroleum gas, ownership and access of energy, distribution of electricity and foreign investment in the sector. The high level of regulations has substantially restricted profit opportunities for several Japanese energy brands, including Kyushu Electric Power, Tohoku Electric Power, ppl, and Fortis, which have fallen out of the Top 50 global rankings.

These regulations are compounded by high global prices for fossil fuels, and Japan has pledged to be carbon neutral by 2050 and is focusing on low carbon emissions and electrification.

American Utilities brand NRG Energy is the fastest growing with an impressive 156% increase in brand value

NRG Energy achieved an impressive increase in brand value growth of 156% year-on year, valued at US$2.9 billion. The utilities brand’s fast growth can be attributed to its commitment to stay on top of industry trends and adapt to the transition to green energy. The brand is among the largest power generators in the USA, and is diversifying into technology to measure environmental impact. Some of the new customer offerings include electricity planning tools, energy management, carbon offsetting and consultancy services.

View the full Brand Finance Utilities 50 report here

ENDS

Note to Editors

Every year, leading brand valuation consultancy Brand Finance puts 5,000 of the biggest brands to the test, and publishes nearly 100 reports, ranking brands across all sectors and countries. The world’s top 100 most valuable and strongest utilities brands are included in the Brand Finance Utilities 50 ranking.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.

The full ranking, additional insights, charts, more information about the methodology, and definitions of key terms are available in the Brand Finance Utilities 50 report.

Media Contacts

Konrad Jagodzinski
Communications Director
Brand Finance
Michael Josem
Associate Communications Director
Brand Finance
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Shreya Hiwale
Communications Executive
Brand Finance
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About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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