Executive Summary / Key Takeaways

• Industry-Leading Demand Inflection: Alliant Energy has secured 3 gigawatts of contracted data center load, driving projected peak demand growth to 50% by 2030—a rate that transforms this traditional utility into one of the fastest-growing names in the sector while distributing fixed costs across a rapidly expanding customer base.

• Regulatory Arbitrage as Competitive Moat: Iowa's innovative rate construct stabilizes base rates through 2029 while allowing full return recovery, and Wisconsin's recent settlement provides 9.8% ROE with 100% CWIP recovery, creating a de-risked capital deployment environment that peers like WEC Energy (WEC) and Xcel Energy (XEL) cannot replicate.

• Financial Velocity with Utility Stability: Nine-month 2025 EPS surged 23% year-over-year to $2.59, with the Q3 result of $1.12 per share contributed significantly to the nine-month EPS of $2.59, indicating the company is trending toward the upper half of its $3.17-$3.23 full-year guidance range. This demonstrates that massive capital investment ($13.4B through 2029) is converting immediately into earnings power rather than the typical regulatory lag that plagues the sector.

• Risk Mitigation Through Strategic Foresight: Management has safe harbored 100% of renewable and storage capex through 2028, limiting tariff exposure to just 1-2% of the remaining $11.5 billion of the capital plan (after accounting for safe-harbored projects), while the 21st consecutive dividend increase and 62.97% payout ratio signal confidence in cash flow durability despite the growth acceleration.

• Critical Execution Hinge: The thesis depends on converting the 2-4 gigawatt pipeline of active negotiations into executed agreements; failure to secure individual customer rate approvals or construction delays on the three data centers already under construction would transform this growth story into a capital-intensive burden.

Setting the Scene: The Utility That Outgrew Its Own Model

Alliant Energy Corporation, originally Interstate Energy Corp. until its 1999 name change, operates as a regulated utility serving Iowa and Wisconsin through its Interstate Power and Light (IPL) and Wisconsin Power and Light (WPL) subsidiaries. For most of its history, this meant predictable but modest growth tied to population expansion and industrial activity in its rural service territories. That model has been shattered by the artificial intelligence revolution.

The company now finds itself at the epicenter of the data center buildout, with executed electric service agreements totaling 3 gigawatts of demand—equivalent to adding a small city's worth of load overnight. This isn't speculative pipeline; physical construction is underway on three large-scale facilities, with two in Cedar Rapids, Iowa and one in Beaver Dam, Wisconsin. The Google (GOOGL) agreement alone accelerates the load ramp for 300 MW, pushing production load into late 2026 rather than the originally planned 2027 timeline.

Why does this geographic concentration matter? Unlike coastal utilities competing for limited transmission capacity, Alliant Energy invested heavily in "plug-in-ready" sites—land banks with existing transmission access that eliminate the 2-3 year interconnection delays plaguing competitors. When Lisa Barton explains, "we are in rural Iowa and rural Wisconsin, surrounded by transmission," she's describing a strategic asset that hyperscalers like Google and QTS (a Blackstone portfolio company) cannot find elsewhere. This positioning allows Alliant to deliver project certainty and near-term earnings while peers wait for grid upgrades.

The competitive landscape reveals why this matters for risk/reward. WEC Energy Group dominates Wisconsin's larger markets but lacks Alliant's Iowa land bank and data center momentum. Xcel Energy's eight-state footprint provides diversification but dilutes focus, while Ameren (AEE) and CMS Energy (CMS) operate in adjacent territories without direct access to the Midwest data center corridor. Alliant's 50% peak demand growth projection by 2030 isn't just industry-leading—it's transformational in a sector where 2-3% annual growth is the norm.

Technology, Strategy, and Regulatory Differentiation: The "Rubik's Cube" Solution

Alliant Energy's management describes their strategy as "solving the utility industry's Rubik's Cube for reliability, resiliency, affordability and growth." This isn't corporate jargon; it captures the precise balancing act required to integrate 3 gigawatts of intermittent data center load while maintaining grid stability and customer rates.

The core technological advantage lies in the company's "all-of-the-above" resource mix: 2,000 MW of new natural gas generation, 1,300 MW of energy storage, 1,100 MW of new renewables, and 530 MW of existing gas unit improvements. The significance of this specific mix for investors is clear: data centers require 24/7 reliability that renewables alone cannot provide, yet gas peakers create regulatory and carbon risk. By pairing dispatchable gas with storage and renewables, Alliant can meet hyperscaler sustainability requirements while guaranteeing uptime—a combination that wins contracts.

The regulatory constructs in both states transform this technical solution into financial certainty. Iowa's electric rate review construct, approved in 2024, stabilizes base rates through 2029 while providing "upside opportunity" if returns exceed authorized levels, with benefits shared with customers. This eliminates the traditional regulatory lag that typically presses utility returns during heavy investment periods. For investors, this means the $13.4 billion capital plan (up 17% from November 2024) will convert to earnings with minimal delay.

Wisconsin's November 2025 settlement agreement provides similar clarity: 9.80% ROE, 54.50% equity ratio, and full recovery of $205 million in solar cost overruns. The settlement extends earnings sharing through 2027, but more importantly, it includes 100% AFUDC on CWIP balances . This is significant because during construction, Alliant earns a return on capital before the asset enters rate base, accelerating earnings recognition and reducing financing drag.

Management's safe harboring strategy demonstrates foresight that directly mitigates policy risk. By ensuring 100% of renewable and storage capex through 2028 qualifies for tax credits before the One Big Beautiful Bill Act's restrictions took effect, Alliant locked in approximately $1.5-1.6 billion in transferable credits. Robert Durian's comment that "better than 95%" of these credits come from projects already in service or safe harbored prior to 2025 means the company is insulated from Treasury guidance changes that could derail competitor projects.

The tariff exposure of just 1-2% of the remaining $11.5 billion of the capital plan (after accounting for safe-harbored projects) further de-risks the investment case. While peers face 20-30% cost increases on Chinese-sourced batteries and modules, Alliant's proactive procurement means batteries are either in possession or subject to only a 20% tariff, with domestic alternatives already evaluated. This cost certainty provides pricing power in competitive data center negotiations.

Financial Performance: Capital Conversion at Record Speed

Alliant Energy's nine-month 2025 results provide compelling evidence that the capital deployment strategy is working. Net income attributable to common shareowners rose to $668 million from $540 million in 2024, while diluted EPS jumped 23% to $2.59. The Q3 result of $1.12 per share contributed significantly to the nine-month EPS of $2.59, indicating the company is trending toward the upper half of its $3.17-$3.23 full-year guidance range.

Segment performance reveals the earnings drivers. IPL's Q3 revenue grew 15.3% to $647 million, with operating income up 20.8% to $180 million. WPL's Q3 revenue increased 8.2% to $540 million, with operating income up 3.8% to $162 million. The divergence matters: IPL benefits from Iowa's new regulatory construct that accelerates earnings recognition, while WPL's more traditional rate case process creates modest lag. However, both segments show that capital investments are converting to revenue requirements immediately.

The Non-utility segment's $23 million Q3 revenue (up 9.5%) and $7 million net income are immaterial to the thesis, but they demonstrate management's ability to extract value from ancillary assets like freight services and wind turbine recycling. These operations provide minor diversification but more importantly, they reflect a management team that monetizes every asset rather than letting them become stranded costs.

Cash flow performance validates the financing strategy. Nine-month operating cash flow of $900 million remained robust despite increased working capital needs from construction. The $1.605 billion used in investing activities reflects the acceleration of data center-related construction, while $1.127 billion from financing activities shows the company is proactively raising capital before it's needed.

The balance sheet at September 30, 2025 tells a story of strategic leverage. Cash and short-term investments totaled $753 million, up from $81 million at year-end 2024. Total debt stands at 60% of capital, but rating agencies treat 50% of the $725 million junior subordinated notes as equity, effectively reducing the debt-to-capital ratio to 59% (with equity at 41%) and preserving investment-grade metrics. This flexibility is crucial: Alliant can issue $2.4 billion in new equity through 2029 without diluting FFO-to-debt ratios below the 50-100 basis point cushion targeted to maintain ratings.

The dividend increase to a $2.14 per share target for 2026 (5% growth) reflects management's confidence, but the moderation from historical levels is purposeful. As Durian explains, "we expect to be in the lower end of the [60-70% payout] range during the period of our plan with higher investment opportunities." This capital discipline ensures that dividend growth doesn't compromise the ability to fund accretive data center investments.

Outlook and Execution: The Path to "7% Plus" Growth

Management's 2026 earnings guidance of $3.36-$3.46 per share represents 6.6% growth over the 2025 midpoint—higher than the company's traditional 5-7% target. More significantly, they project "7% plus" CAGR from 2027-2029 based on rate base growth and data center revenues. This acceleration matters because it suggests the data center load will begin materially contributing to earnings earlier than typical utility investments.

The load ramp timeline is critical for valuation. Durian clarifies that 2026 impact is "pretty modest," with production load starting in Q4 2026 and ramping through 2030. This means investors must look beyond immediate EPS accretion to the compounding effect of serving 3 gigawatts at full capacity. The Google agreement's acceleration of 300 MW into 2026-2027 demonstrates customer urgency that reduces execution risk.

The capital plan's composition reveals strategic priorities. The $600 million increase from November 2024 was "specifically natural gas generation" to meet data center peak demand. This demonstrates management's strategic approach: they are not blindly building renewables but are matching resource characteristics to customer needs. Gas provides dispatchable capacity that complements the existing 1.8 GW wind fleet and 1.5 GW of new solar, creating a balanced portfolio that meets both sustainability commitments and reliability requirements.

Regulatory approvals provide near-term catalysts. With 4 active dockets in Wisconsin and 3-4 in Iowa, including advance ratemaking for 1 GW of wind and certificates for 814 MW of gas generation, 2026 decisions will clarify the earnings trajectory. The IUC's expected Q1 2026 decision on IPL's wind filing, with its $3,020/kW cost cap and 11.25% ROE request, will signal whether Iowa's constructive regulatory environment extends to large-scale renewables.

Management's pipeline commentary suggests upside beyond the base case. Barton notes "2 to 4 gigawatts in active negotiations" beyond the 3 GW under contract, with Big Cedar "essentially fully booked." This implies the company could double its contracted load if negotiations convert. The hyperscaler quality of customers—"very high-quality hyperscalers or colocators with a lot of financial wherewithal"—reduces credit risk and increases confidence in execution.

Risks: The Asymmetries That Matter

The most material risk is regulatory reversal. While Iowa's construct currently provides certainty, legislation could change. The Iowa Governor's proposed bill to lower advanced ratemaking thresholds to 40 MW and require non-contested IRPs every five years is supportive, but future political shifts could alter the balance. If the IUC stops approving individual customer rates for data centers, the 3 GW pipeline could collapse, leaving $9 billion of generation investment without contracted load.

Construction execution risk is heightened by the compressed timeline. Alliant must complete 2,000 MW of gas generation, 1,300 MW of storage, and 1,100 MW of renewables while simultaneously building three data centers. Supply chain disruptions, labor shortages, or interconnection delays could push in-service dates beyond 2027, delaying earnings recognition and potentially triggering customer penalties. The company's track record of completing Grant County storage (100 MW) and Wood County storage (75 MW) on time in 2025 provides some mitigation, but the scale of concurrent projects is unprecedented.

Tariff policy remains a wildcard despite minimal exposure. While Alliant has safe harbored projects and limited battery exposure to 20% tariffs, retroactive tariffs on solar cells and modules could impact the 1.5 GW of recently commissioned solar. The company acknowledges it "cannot predict the outcome of ongoing litigation with certainty," creating a contingent liability that could affect returns on $2+ billion of solar investment.

The coal decision at Columbia Units 1 and 2 introduces environmental and cost risk. Reversing the planned 2029 retirement to continue operations while evaluating gas conversion creates a $398 million net book value exposure if carbon regulations tighten. While this provides near-term capacity for data center load, it could become a stranded asset if EPA regulations force early retirement without full cost recovery.

Customer concentration risk is rising. Three data center customers represent 3 GW of load, and while their financial strength is high, any single cancellation would materially impact the growth thesis. The ESAs include "substantial customer commitments," but actual demand is subject to "interconnections, siting approvals, and actual customer demand." If AI investment slows or data center economics shift, Alliant could be left with overbuilt generation.

Valuation Context: Pricing for Growth in a Utility Wrapper

At $69.47 per share, Alliant Energy trades at 21.85x trailing earnings and 21.51x forward P/E, which, alongside its revenue and EBITDA multiples, reflects a premium compared to traditional utility peers, justified by its growth profile that resembles tech infrastructure. The 2.92% dividend yield is competitive with WEC's 3.19% and XEL's 2.78%, but the payout ratio of 62.97% sits at the lower end of the 60-70% target range, preserving capital for growth.

Enterprise value of $29.03 billion represents 6.79x revenue and 15.56x EBITDA—multiples that appear elevated for a utility but reflect the 12% rate base CAGR through 2029. Compare this to WEC's 6.04x revenue and 15.28x EBITDA with mid-single-digit growth, or XEL's 5.84x revenue with slower load growth. Alliant's premium is justified by the 50% demand increase versus peers' 2-3%.

The price-to-book ratio of 2.44x sits between WEC's 2.69x and XEL's 2.29x, but Alliant's book value is growing faster due to the $13.4B capital plan. With a projected 12% rate base CAGR, book value per share should compound at high-single-digit rates, supporting multiple expansion if execution continues.

Debt-to-equity of 1.63x appears higher than WEC's 1.51x but is manageable given the regulatory equity treatment of hybrid securities. The FFO-to-debt metrics have "50 to 100 basis points of cushion" to retain current ratings, providing flexibility to fund the $1.6 billion in remaining equity needs through 2029 without diluting existing shareholders excessively.

Free cash flow remains negative (-$1.08B TTM) due to heavy construction spending, but quarterly FCF turned positive at $1.47B in Q3 2025 as tax credit monetization accelerated. The $1.5-1.6 billion in transferable tax credits over four years provides a non-dilutive financing source that competitors cannot replicate at this scale, effectively reducing the cost of capital for renewable investments.

Conclusion: The Backbone of the AI Economy

Alliant Energy has engineered a rare convergence of utility stability and technology-driven growth that positions it as the essential infrastructure backbone for AI expansion in the Midwest. The 3 gigawatts of contracted data center load, supported by unique regulatory constructs that guarantee returns and minimize lag, transforms the traditional utility investment thesis from slow-and-steady to high-growth-with-downside-protection.

The central thesis hinges on two variables: regulatory durability and construction execution. Iowa's rate construct and Wisconsin's settlement provide visibility through 2029, but investors must monitor the 7 active dockets in 2026 for signs of regulatory friction. The concurrent construction of 4,430 MW of generation and storage while building three data centers tests management's execution capacity, though the on-time completion of 175 MW of storage in 2025 provides confidence.

What makes this story attractive is the asymmetry: downside is cushioned by regulated returns and contracted load, while upside includes the 2-4 GW pipeline that could double the growth trajectory. The stock's valuation at 21.5x earnings doesn't yet reflect the 7%+ earnings CAGR starting in 2027, creating potential for multiple expansion as data center revenues materialize. For investors seeking exposure to AI infrastructure without technology valuation risk, Alliant Energy offers a regulated utility wrapper around one of the sector's most compelling growth stories.