Heating Degree Days (HDD) and Cooling Degree Days (CDD) are determined by comparing the average temperature of a day and comparing it to 65°F (18.5° C). The average is determined by the maximum and minimum temperature. The 65° (18.5° C) is based on the approximate outside temperature to maintain an indoor temperature of 70°. (At a temperature of 70° (21.1° C) you likely do not need to operate your Heating, Ventilation, and Air Conditioning system)
So HDD are used as a measure of how long and how much the outdoor temperature is below the baseline; resulting in your building requires heating. CDD are used as a measure of how long and how much the outdoor temperature is above the baseline; resulting in your building requiring cooling.
When approximately 39% of all energy is used to operate HVAC systems, you can understand the value of degree days. The total amount of heating degree days and cooling degree days for a year help determine the amount of fuel/power required for a given region. An accurate prediction of degree days can be an added tool in developing dependable energy saving projects with reduced consumption.
Of course the 65° (18.5° C) is just an average base temperature, but it is important to understand that basic degree day charts use 65° (18.5° C) as a baseline. A more accurate summation of degree days could be achieved by altering the baseline to represent the actual building in the energy model. For example you could consider a particular building’s internal heat loads (i.e. heat from people, computers, and machinery). The occupants of the building may operate the building at a different temperature than 70° (21.1° C) depending on use (i.e. office, residential, industrial).