Mexico has a significant housing shortage with an estimated deficit of 9.6 million homes. Many of these are needed by families on low incomes.
EcoCasa provides low-interest construction loans to developers to build ‘EcoCasas’ – affordable new homes that cut CO2 emissions by at least 20% - without passing on extra costs to purchasers. The homes save around $200 energy bills and 7,000 tonnes of CO2 a year.
EcoCasa has shown how financial incentives for building developers can stimulate the growth of energy-efficient, affordable housing on a large scale. The model could be replicated far and wide, making the housing sector much more sustainable in Mexico and beyond.
Ashden judging panel
By unlocking financing to build low-carbon social housing, EcoCasa stands to help transform Mexico’s social housing sector. The programme is the initiative of local housing development bank Sociedad Hipotecaria Federal (SHF), working with the Inter-American Development Bank (IDB) and the German Development Bank (KfW) to offer low-interest loans to local building developers in return for them creating sustainable homes. Developers must build social housing with at least 20% lower carbon emissions than standard designs, without increasing the sale price. Carbon savings are achieved through a range of energy-saving measures like insulation, window shades and solar water heaters, with SHF checking designs and construction quality. With nearly 12,000 homes already sold or under construction, there’s funding for up to 27,600 homes.
Already nearly 9,000 families are enjoying the benefits of EcoCasas, with greater thermal comfort as well as around US$200/year saving on energy bills. The energy model estimates that these homes save in total around 7,000 tonnes of CO2 each year, or at least 280,000 tonnes of CO2 over their lifetime, a significant contribution to Mexico’s commitment to cut greenhouse gas emissions. Detailed monitoring will soon provide more insight into the benefits achieved.
The EcoCasa programme started in 2013 By the end of April 2015 it had set up contracts with ten developers and lent them a total of US$171 million for building 12,320 EcoCasas. With 8,872 of these EcoCasas (551,000 m2 floor area) completed and an average of 3.9 people per Mexican household, already 34,600 people benefit.
For us, the monitoring of the EcoCasa programme is really important. It will help us understand what brings most benefits to homeowners, and that will guide how we build in future.
Oscar Villagran, Head of Technology and Sustainability, Grupo Sadasi
EcoCasas that have been contracted to date save about 0.8 tonnes/year CO2 on average, according to the energy model. This is equivalent to 7,000 tonnes/year CO2 saving for the EcoCasas built to date. With an expected lifetime of 40 years or more, they should provide a total saving of at least 280,000 tonnes CO2. This makes an important contribution to Mexico’s commitment to cutting greenhouse gas emissions.
Actual savings will be measured as part of a detailed monitoring and impact evaluation programme which started in March 2015 (see box).
Benefits for households
Households benefit from lower energy bills. At current prices for electricity and gas, bills are predicted to be 28% or US$200/year lower on average in an EcoCasa. Since the target households earn between US$4,000 and 20,000 year, this can be a significant saving.
Anecdotally, EcoCasa owners are very positive about their homes, citing low bills and comfort. One owner at Hidalgo told the visiting Ashden Assessor that, because of his low bills, he had convinced a work colleague to buy an EcoCasa. Sra Hernandez Martinez at Monterrey (see photo) said that her EcoCasa stayed cooler in summer, and was warm enough in winter, without the need for air-conditioning or heating. Her bills were about US$300/year lower than in her previous home.
The results of the monitoring and impact evaluation programme will provide objective comparisons of bills, indoor temperatures and perceived comfort.
The wider urban context
Developers who take part in the programme are gaining skills and experience in building houses to higher standards of energy efficiency. Not only does this give them a competitive edge with purchasers, they will need these skills to meet increasingly strict government regulations in the future.
The programme has shown how it is possible to move the usually conservative construction industry towards more sustainable practice. This is an important step for Mexican government as it works to transform the housing sector and achieve better and more sustainable urban design as a whole.
In comparison with 2014, in 2015…
- The number of EcoCasas in the pipeline increased by 51%.
- The number of houses sold increased by 55%.
- The total lifetime saving of CO2 for EcoCasas constructed to date has increased 55% from 220,157 tonnes to 341,224 tonnes.
The 2015 Ashden Award to EcoCasa recognises how the partnership is not just providing new homes that are sustainable as well as affordable, but is also transforming the whole construction sector through its support to housing developers. The approach has great potential for replication.
How the programme works: What is an EcoCasa?
An EcoCasa is a newly-built home that emits at least 20% less CO2 during use than a standard home (and in addition, a minimum of 12 kg/year less CO2 per m2 of floor area in hot climate zones). Cutting energy and CO2 should not be achieved at the expense of comfort: EcoCasas are designed to provide an internal temperature of between 20 and 25oC throughout the year
EcoCasa performance is specified in terms of CO2 reduction rather than energy reduction, because the programme is part of the Mexico’s national programme to reduce greenhouse gas emissions (see box).
Energy saving measures that have been found to be cost-effective for EcoCasas include increased insulation in hot, dry regions of Mexico (to reduce the need for energy for both air-conditioning and heating); increased thermal mass in hot humid regions (to reduce the need for air-conditioning); and solar water heaters in temperate zones (to reduce the use of gas). Other measures frequently used are shading, improved glazing, enhanced natural ventilation and solar-reflective paint.
My home stays cool in summer and warm enough in winter, without air-conditioning or heating.
Sra Martinez Hernandez, EcoCasa owner, Monterrey
How are EcoCasas designed?
SHF identifies housing developers who own sites that already have building approval for social housing development, explains the loan scheme, and encourages them to propose designs for EcoCasas.
A key strategy of the programme is that developers have the freedom to cut CO2 emissions in whatever way they chose. Following a ‘whole house approach’, SHF does not specify how EcoCasas should be designed, or what technologies should be used. Instead it provides guidance and training for developers to learn about different approaches and to identify what is most appropriate and cost-effective for their sites. If the initial design does not achieve sufficient CO2 saving, then it is refined and re-modelled through discussion between SHF and the developer, until the requirements are met.
In this way, not only does the programme provide housing that is energy efficient, it also increases expertise within the building sector as a whole.
How does the loan work?
When a developer, site and EcoCasa design have been approved by all three partner banks, SHF draws up a detailed contract with the developer for an agreed number of EcoCasa homes. The loan offered for the EcoCasas will be at an interest rate about 2% lower than the market rate, and for a maximum of 65% of the construction cost (excluding land and services). An average project is for about 300 EcoCasas, and is usually part of a larger development, but this varies between developers.
The EcoCasa team have introduced us to new ideas and provided training, as well as low-interest loans.
German Figueroa, Finance Director, Grupo Gadol
SHF carries out monthly inspections of the sites to ensure that EcoCasas are being built correctly. The EcoCasa loan is disbursed in stages, linked to satisfactory completion of different phases of construction. This process helps to support builders who may be using unfamiliar techniques or materials.
How much do EcoCasas cost and how are they marketed?
US$1 = 15.4 Mexican pesos (MPX), April 2015 EcoCasa measures add between MPX 6,000 and 12,000 (US$400 and 800) to the cost of building a house that will sell for between MPX 250,000 and 900,000 (US$16,600 and 60,000). A condition of the low-interest construction loan is that the EcoCasa must be sold for no more than equivalent baseline home. Most purchasers get a mortgage through one of two government-backed savings-and-loan providers. Those on the lowest incomes are also eligible for a government grant towards the 20% deposit that is needed.
Developers promote the option of buying an EcoCasa through their normal marketing strategies. For example, developer Gadol made a short promotional video at their site in Hidalgo that includes information about some of the benefits of EcoCasas and features two owners.