Stock Story: Alliant Energy
Alliant Energy (LNT) offers a clean way to capture the US power-demand upcycle: a constructive Midwest regulatory regime (notably Iowa’s forward test years and advanced ratemaking), a leading renewable mix (~46% wind/solar), and 3+ GW of contracted peak demand from data centres and industrials – more than half its current ~5.6 GW system peak. With ~US$11.5 billion of capex over four years (~68% of the 2025 rate base), the company has visibility into rate base and earnings growth, supported by constructive authorised returns, cost-recovery certainty, take-or-pay contracts from data centres, and an increasingly competitive delivered cost position.
Company snapshot
Alliant, a regulated utility headquartered in the US Midwest, operates through Interstate Power & Light (IPL, Iowa) and Wisconsin Power & Light (WPL, Wisconsin). The company has a track record of disciplined capital allocation, consistent earnings delivery and constructive regulatory relationships, giving it a clear pathway to sustainable, long-term growth.
Why regulated utilities – and why Alliant?
Under the US regulatory model, prudent capital added to a regulated utility’s rate base earns an authorised return, providing visibility on long-term earnings. As US electricity demand accelerates beyond the last decade’s pace, regulated utilities offer resilient earnings and sustainable cash flow with limited risk.
Alliant Energy stands out as a clear beneficiary of surging US power demand from AI driven data centres and US industrial onshoring. The utility’s capex is aligned to grid modernisation, reliability and decarbonisation. With the rise of commercial and industrial loads, especially data centres in Iowa and Wisconsin, Alliant is well-positioned to participate meaningfully in the next phase of US electricity system investment.
Alliant plans to invest ~US$11.5 billion over the next four years – the largest multi year capital program in its history – equivalent to ~68% of its 2025 rate base. The spend is focused on transmission and distribution upgrades, renewables additions and enabling infrastructure for large loads. Given the company operates in a constructive regulatory regime in the US state of Iowa, we expect that execution on this plan should translate efficiently into earned returns.
Regulatory backdrop: constructive and improving (Iowa in focus)
Alliant’s service territories in Wisconsin and Iowa are constructive for authorised return, capital deployment and economic development. (Given Wisconsin is covered in the recent Stock Story on WEC Energy, here we focus on Iowa.)
Iowa is turning more constructive. In particular, authorised returns are above national averages. Recently, the state has adopted forward test years and extended advanced ratemaking for renewables, allowing certain assets to earn returns comparable to, and in some cases higher than, FERC-regulated transmission. The framework provides cost-recovery
certainty, sharing mechanisms that support achieving authorised returns and, where appropriate, outperformance.
Under the state’s regulatory regime, Alliant also has access to flexible tariffs for large loads. Iowa’s individual customer rates (ICR) enable competitive, expedited onboarding of large users (e.g. data centres), aligning economic development goals with timely utility investment.
Renewables leadership supports affordability and growth
Among the regulated utilities, Alliant is a leader in renewables. We estimate that ~46% of Alliant’s resource capacity is wind and solar – clean technologies with typically low LCOE (levelised cost of electricity), supporting customer affordability and system resilience.
Furthermore, although the policy landscape has changed in the US this year, with federal tax credits for clean energy investment phased out, the company has safe-harboured incentives for almost all its renewables. These include wind and solar projects and associated tax credits. Even without IRA credits, these projects remain economic, underscoring the robustness of the build.
Through this investment pipeline, Alliant also has a strategic advantage. A cleaner, lower cost resource mix helps keep residential bills manageable while attracting large, power-intensive customers to Alliant’s grid.
Demand surge: data centres and onshoring
The Midwest is at the inflection point of load demand growth, particularly in Wisconsin and Iowa. Rapid electricity demand growth is reversing decades of muted load trends, making the Midwest one of the fastest-growing regions.
Within this environment, Alliant has a strong contracted load. Alliant’s 3+ GW of contracted peak demand is significant relative to its current ~5.6 GW system peak. These are resilient, durable loads supported by take-or-pay structures, minimum-demand commitments and upfront payments from data centre operators and other large customers.
Finally, we see these factors as supporting an ongoing flywheel in investment for Alliant. Load growth necessitates incremental grid and generation investment, which in a constructive regulatory environment converts directly into rate-base expansion and earnings visibility.
By Fiona Wu, CFA,
Investment Analyst
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