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Stan said:
Condensation is a function of dewpoint.

This is true Stan but for condensation to deposit moisture there must be a surface that is below the dew point, except of course where the humidity is 100% and you have fog indoors!

It is my belief that putting insulation outside of a concrete, brick or other 'massive' structure would use the thermal mass of the walls to stabilise the internal temperature and I believe this is being done in some new buildings around here (latitude 41S) where we have very cold, very strong, onshore winds.
 
The Artfull Bodger: Very true. Insulation on either side of the wall is an improvement. Putting it on the outside of masonry walls requires all the interior heat be provided from the inside as the masonry no longer absorbs much heat from the sun. At the same time, it reduces heat soak and will reduce air conditioning cost on a hot day. There are a lot of calculations to determine the most economical or now, the greenest. On a small backyard shed there are also zoning laws, building code and extra cost involved.

For anyone interested in how effective insulation is: My garage is 24' x 24' x 8'. It has R13 fiberglass batts in the walls and R20 fiberglass batts in the ceiling with a 16' wide insulated metal door. Last winter, if I drove my warm car into the garage and closed the door, twelve hours later the indoor temperature was 25°C warmer than outside temperature just from the heat radiating of the engine.
 

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