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Cooling Degree Day

Trading Term

A cooling degree day, abbreviated CDD, measures how far a day’s average temperature rises above a 65°F baseline, and serves as a proxy for demand for air conditioning. A day averaging 85°F accumulates 20 cooling degree days. The 65°F reference reflects the approximate outdoor temperature at which typical buildings need neither heating nor cooling, and because electricity demand responds sharply to summer heat, CDD totals correlate strongly with power sector load and with the revenues of entities exposed to it.

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