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May 25, 2021

EIA expects more electricity consumption this summer as economy recovers from pandemic

U.S. summer retail sales of electricity by sector
Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Our Summer 2021 Electricity Industry Outlook, a supplement of the Short-Term Energy Outlook, projects 1.5% more U.S. retail sales of electricity this summer than last summer. Much of the growth we expect will occur in the commercial and industrial sectors, reflecting an improving economy following the pandemic-related downturn in 2020. We forecast U.S. residential sector retail sales of electricity during the summer of 2021 to be 0.9% lower than last summer, mostly reflecting milder weather forecasted by the National Oceanic and Atmospheric Administration. This decrease, however, is offset somewhat by growth in the number of residential customers and by more people working from home than in past years.

Between June and August 2020, U.S. retail electricity sales across all consumption sectors totaled 1,055 billion kilowatthours (kWh), the lowest amount consumed since summer 2015. Last year’s economic contraction affected retail electricity sales to the commercial and industrial sectors the most, which totaled a combined 357 billion kWh last summer, the lowest amount since 2004. Retail sales of electricity to the U.S. industrial sector during the summer of 2020 totaled 239 billion kWh, the lowest amount since the recession in 2009.

Meanwhile, residential electricity sales totaled 457 billion kWh between June and August 2020, the most on record for that period. Residential electricity consumption reached a record high, partially because of the near-record warm temperatures last summer. In addition, more people were working from home and generally spending more time in their homes as a result of stay-at-home orders and social distancing guidelines.

Based on economic forecasts from IHS Markit, we expect U.S. GDP in 2021 to grow by 6.2%. Growing economic indicators greatly contribute to our Summer 2021 Electricity Industry Outlook, which forecasts that retail sales of electricity to the industrial sector during June, July, and August 2021 will be 4.5% greater than last summer. Increased economic activity will also likely boost U.S. commercial sector demand for electricity this year. We forecast the U.S. retail sales of electricity to the commercial sector during the summer of 2021 will be 2.6% more than last summer but still 3.0% less than in 2019.

The effect of less electricity consumption because of expected milder summer weather is offset somewhat by our forecast 1.6% increase in the number of residential electricity customers in 2021, which reflects a rebound in household formation after the economic slowdown of 2020. In terms of the amount of electricity consumed by a typical home, we expect electricity use per residential customer to average 1,090 kWh per month between June and August 2021, which would be 2.5% less than last summer.

Principal contributors: O. Nilay Manzagol, Tyler Hodge