Concrete blocks are often used instead of poured concrete for foundation walls in houses. Properly installed, reinforced and with grouted openings in the blocks, they are as solid as poured concrete. They are often used because they can be less expensive than building wooden forms and pouring concrete. Blocks are more porous than poured concrete and need to be properly sealed against moisture and insulated against heat and cold. The best insulation for a concrete block basement combines interior and exterior insulation. The best choice for insulating the exterior face of a concrete block wall is some type of rigid foam board.
Cover the concrete block wall with a good moisture barrier; some type of liquid asphalt or cement-based sealant is often used, but a tar paper or similar membrane also can be used. Seal the wall from the footing to above the ground level on the concrete blocks so no water can come between the wall and insulation. Let any moisture barrier dry thoroughly before installing foam board.
Install rigid foam board with construction adhesive or mechanical fasteners. Dow, the creator of Styrofoam and a major insulation manufacturer, recommends securing foam board panels with concrete fasteners long enough to penetrate the foam and 1 1/2 inches into the block, with 1-inch corrosion-resistant washers on the head. Use two fasteners per board a few inches from the edge of the board. Some installers spread construction adhesive on panels and press them firmly into place until the adhesive sets.
Rest the insulation panel on top of the concrete block wall footing and make sure it extends at least above the expected finish grade of the outside dirt. Seal the top of each panel with a sealant compatible with the foam board to prevent water from getting in through the top. Butt panels tightly together; seal the seams with a compatible tape if possible.
Place boards with grooved faces outward if they have grooves; these divert water down the panel into a drainage channel normally installed around the footing. Cover the bottom of the exterior foam board panels with several inches of some type of loose granular material to allow water to drain away.