Businesses are using more electricity than homes for the first time on record

Power consumption in the U.S. hit a record high last year. It’s going to hit a record high again this year, and probably next year too, according to a new forecast from the Energy Information Administration.

Which makes sense, judging by the way my electric bill keeps going up.

That growth is thanks to businesses, which, for the first time on record, are expected to use more energy than homes. The commercial sector will outpace the residential sector in 2026 and probably 2027, too. Analysts say the trend will likely persist for a while.

There are two big reasons behind this shift. The first comes from the residential side of the equation.

“Electrical usage in households has basically been flat for a number of years,” said Ajey Chandra, CEO of Baker and O’Brien, an energy consulting firm.

Household power demand peaked in 2010. Then came better insulation, more efficient appliances, and LED bulbs. We just got better at living comfortably on less power and less space.

“Now people are probably reexamining that to a certain extent, we don't need, I don't know, 5,000 square foot houses, if your kids have grown out of the house,” Chandra said.

While residential use stays flat, commercial use boomed after the pandemic. Which brings us to our second reason: “I think the central piece of the story is data centers in terms of growth,” said Akshaya Jha, a professor of economics and public policy at Carnegie Mellon University.

He said this shift in demand is because of an AI-driven boom in data centers, but also in how the energy from those data centers is being recorded.

Everyday people using AI shows up on the residential side as the electricity needed to use your laptop. But that’s a tiny fraction of the power AI requires.

“Let's say, you're putting a prompt into ChatGPT. ChatGPT on the back end is using data center compute in order to give you an answer to your query, and that is commercial demand,” Jha said.

As a result, it’s recorded as commercial energy use.

Energy use in both sectors is expected to keep climbing overall. On the residential side, even as electric appliances keep getting more efficient, some homes will require more power as they make the switch to electric.

“You may have a Tesla in your drive and a home battery and a heat pump or something like that,” said energy economist Caspian Conran at Baringa.

He said less gas and gasoline at home means using more electricity. And on the commercial side, Conran said, the U.S. has arrived at a fourth industrial revolution.

“We're in the age of electrons, we're in the age of compute and energy availability, and power demand is a core component of that,” he said.

As long as the data center demand holds, the forecast says commercial power use will increase faster — and keep outpacing — the residential side.