Heating Degree Day - HDD

The number of degrees that a day's average temperature is below 65o Fahrenheit (18o Celsius), the temperature below which buildings need to be heated. The price of weather derivatives traded in the winter is based on an index made up of monthly HDD values. The settlement price for a weather futures contract is calculated by summing HDD values for a month and multiplying that sum by $20.

To calculate HDD, take the average of a day's high and low temperatures and subtract from 65. For example, if the day's average temperature is 50o F, its HDD is 15. If every day in a 30-day month had an average temperature of 50o F, the month's HDD value would be 450 (15 x 30). The nominal settlement value for this month's weather derivative contract would therefore be $9,000 (450 x $20).

Investment dictionary. . 2012.

Look at other dictionaries:

  • heating degree-day — a degree day below the standard temperature of 65°F or 19°C, used in estimating fuel consumption. Cf. cooling degree day, growing degree day. * * * …   Universalium

  • heating degree-day — a degree day below the standard temperature of 65°F or 19°C, used in estimating fuel consumption. Cf. cooling degree day, growing degree day …   Useful english dictionary

  • Heating degree day —   A unit that measure the space heating needs during a given period of time.   California Energy Comission. Dictionary of Energy Terms …   Energy terms

  • Degree day — A degree day is a measure of heating or cooling. Totalized degree days from an appropriate starting date are used to plan the planting of crops and management of pests and pest control timing. Weekly or monthly degree day figures may also be used …   Wikipedia

  • Degree Day —   A unit for measuring the extent that the outdoor daily average temperature (the mean of the maximum and minimum daily dry bulb temperatures) falls below (in the case of heating, see Heating Degree Day), or falls above (in the case of cooling,… …   Energy terms

  • degree-day —  ̷ ̷ˈ ̷ ̷| ̷ ̷ noun : a unit that represents one degree of declination from a given point (as 65°) in the mean outdoor temperature of one day and is often used in measuring fuel requirements of buildings * * * /di gree day /, n. Engin. one degree …   Useful english dictionary

  • degree-day — /di gree day /, n. Engin. one degree of departure, on a single day, of the daily mean temperature from a given standard temperature. Abbr.: dd Also, degree day. Cf. cooling degree day, growing degree day, heating degree day. [1925 1930] * * * …   Universalium

  • degree day — Term created to assess and acknowledge expected demand for energy. A degree day value is the difference between a day s average temperature and a previously set temperature ( in the U.S., 65 degrees Fahrenheit). Degree days above 65 degrees are… …   Financial and business terms

  • degree day — noun 1. the day on which university degrees are conferred • Syn: ↑commencement day • Hypernyms: ↑day 2. a unit used in estimating fuel requirements for heating a building • Hypernyms: ↑temperature unit …   Useful english dictionary

  • Degree-day —   A unit measuring the extent to which the outdoor mean (average of maximum and minimum) daily dry bulb temperature falls below (in the case of heating) or rises above (in the case of cooling) an assumed base. The base is normally taken as 65… …   Energy terms

  • degree day — noun a) A measure of heating or cooling, computed as the integral of a function of time that generally varies with temperature. b) A unit used in estimating the fuel consumption for a building; equal to the number of degrees that the mean… …   Wiktionary

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