Heating and Cooling Degree DaysHDD
Degree days measure how much heating or cooling demand the weather creates. A heating degree day counts how far the daily average temperature falls below a base (65°F in the US, often around 18°C elsewhere); a cooling degree day how far it rises above it. They drive natural gas and power forecasts and weather derivatives.
A cold snap sends gas prices up; a mild winter knocks them down. Degree days turn the weather into a number traders can add up, compare and forecast.
- Category
- Commodities, Energy and Carbon
- Reading time
- 3 min
- Also called
- HDD and CDD, Degree days, Weather degree days
- Updated
Degree days in plain words
Degree days measure how cold or warm a location is.1
They compare the daily mean temperature — high plus low, divided by two — with a 65°F standard in the US.1
Below the base gives heating degree days, above gives cooling degree days.2
How to calculate degree days
Get high and low
Record the day's high and low temperature.
Find the mean
Add high and low and divide by two.1
Compare with the base
Use 65°F in the US; many other countries use about 18°C.
Heating degree days
If the mean is below 65°F, subtract it from 65.2
Cooling degree days
If the mean is above 65°F, subtract 65 from it.2
Add them up
Accumulate daily values to compare months and seasons.2
Worked examples
Example 1 — A cold day
35 HDDHypothetical high 40°F, low 20°F.
| Mean | (40 + 20) ÷ 2 = 30°F |
| HDD | 65 − 30 = 35 |
Below 65°F, subtract the mean from 65 to get heating degree days.2
Example 2 — A hot day
18 CDDHigh 94°F, low 72°F.
| Mean | (94 + 72) ÷ 2 = 83°F |
| CDD | 83 − 65 = 18 |
Above 65°F, subtract 65 from the mean for cooling degree days.2
Example 3 — Week vs normal
15% more heating demandDaily HDD 30, 32, 28, 35, 25, 20, 26; the hypothetical normal week is 170.
| Weekly total | 30 + 32 + 28 + 35 + 25 + 20 + 26 = 196 |
| Vs normal | 196 − 170 = +26 HDD |
| Percent | 26 ÷ 170 ≈ 15.3% colder |
Accumulating daily values is how periods are compared; a colder week points to more heating demand.2
Heating vs cooling degree days
| Aspect | HDD | CDD |
|---|---|---|
| Mean temperature | Below base | Above base |
| Calculation | Base − mean | Mean − base |
| Main demand | Heating, natural gas | Air conditioning, power |
| Peak season | Winter | Summer |
Where degree days are used
Gas forecasts
Projecting winter heating demand.
Power forecasts
Projecting summer cooling load.
Weather derivatives
Settling contracts on HDD or CDD totals.
Economic data
Adjusting energy use for weather.
Advantages and disadvantages
Advantages
- Simple and standardised.
- Easy to accumulate and compare.
- Strongly linked to energy demand.
- Basis for weather Hedging.
Disadvantages
- Base temperature is a convention.
- Ignores wind, humidity and sunshine.
- Local readings may not reflect a whole region.
- Buildings respond differently to the same weather.
Going deeper
Read as far as you need. Each level builds on the one before it.
The formula
Beginner
Mean temperature versus a 65°F standard in the US.1
Accumulation
Intermediate
Daily values are summed so months and seasons can be compared.2
Base and markets
Advanced
The US uses 65°F; elsewhere ~18°C is common.1 Traders compare forecast totals with normals to anticipate gas and power demand.
Common mistakes
Wrong base
Mixing 65°F and 18°C figures.
Negative values
Counting HDD and CDD on the same day.
Ignoring normals
Reading totals without a baseline.
Single station
Using one city for a national view.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Degree days measure heating and cooling demand.
- Mean = (high + low) ÷ 2.
- US base is 65°F; ~18°C elsewhere.
- HDD below base, CDD above.
- Totals vs normal drive gas and power forecasts.
Frequently asked questions
Why 65°F?
Can a day have both HDD and CDD?
Are degree days used outside energy?
Further learning
- Futures Contract
Gas and power contracts that react to weather.
- Hedging
Weather hedges.
- Economic Indicator
Weather-adjusted data.
- Volatility
Why weather shocks move prices.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. Energy Information Administration. Degree days (opens in a new tab) Checked .
- National Weather Service (NOAA). What are Heating and Cooling Degree Days (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.