From 2002 to 2016, with more than 291 million rural population being transformed as urban residence, the residential energy consumption increase 190% during this period. Accurately identifying and examining the major driving forces behind this quick growth of energy demand is essential to understand the evolution of energy demand pattern. Different from existing literature, the present study first clarifies the concept of residential energy consumption by covering both building and transportation energy consumption. More importantly, it introduces two new variables in the decomposition model, namely the wealth effect which represents the change of durable goods and the intensity effect which describes the energy intensity of durable goods. The Logarithmic Mean Divisia Index (LMDI) approach is applied with the national data during 2002 to 2012. Our results show that the wealth effect and energy intensity effect are major engines to drive the residential energy growth. Moreover, our findings offer evidence against the general argument that “urbanization will increase residential consumption”.