Types of Heat Energy Loss: By Conduction and By Convection
Keeping an uninsulated or poorly insulated home warm in the winter time is much like trying to take a bath in a bathtub that has an open drain - the water constantly runs out, requiring constant refilling. WIth respect to heating, you will have the fill that "leaky" house frequently with heat, and the heat levels will never be consistent. This portion of the site discusses the two major types of heat loss. With this knowledge, you can get a better understanding of how your home insulation can reduce energy cost.
Two Common Types of Heat Loss: Conduction and Convection
Conductive heat transfer refers to heat that transfers through your walls, as opposed to the heat that might pass around the walls through cracks. In this type of heat transfer, there is a molecule-to-molecule transfer of energy. Or, as my old heat chemical engineering textbook states: "Heat is conducted by the transfer of energy of motion between adjacent molecules" 1. As an analogy, this would be like pushing a person on one side of a very crowded room and having that person bump into the person next to them, resulting in that person bumping into the next person, and so on, resulting in someone on the far side of the room being moved. Conductive heat transfer is governed largely by your R-values in your walls. So, if you have uninsulated walls or walls with poor R-value, it is very easy for heat to pass through.
Convective heat transfer refers to heat that transfers around your walls via a medium, such as a stiff wind. A device that efficiently uses this type of heat transfer is a convection oven - it uses hot air to quickly transfer heat to the food. In a similar manner, a cold wind, passing through leaky windows, doors, and other cracks, will quickly remove heat from a home, even though conductive heat losses through walls and ceilings are at a minimum. In fact, in wind-prone areas, these types of losses may be greater than conductive heat losses. My chem-E text refers to this as "bulk transport" that is governed by the laws of fluid mechanics.
In summary, you need to guard against both types of heat loss. You could enclose your uninsulated home in light plastic and thus virtually eliminate convective heat losses, but you would still have a very cold home due to conductive heat losses. Conversely, you could achieve higher than needed R-values in your walls to minimize conductive heat losses, yet neglect windows and doorways, and find yourself in a very cold (and drafty) home due to convective heat losses.
Remember that Energy is Lazy!
Heat energy is a lot like us humans. If there is an easy path to take, it will take it. Thus, the heat from your home will find its way out in the easiest manner possible. This means that if you do a super-duper job of insulation on the whole house yet neglect even a single wall, door, or window, a lot of heat can leave through that weak point. If only 5% percent of your home is not insulated, that does not mean you will only lose 5% more heat - try leaving a single door open in the dead of winter to test that out! So this means you need to eliminate all the "weak" spots. A way to find these weak spots is to closely inspect around doors, windows, lights, and other potential heat loss points by using the candle test (holding a lit candle near windows or doors to detect drafts) or simply feeling for cold spots. A more sophisticated (and expensive) method involves a thermal imaging energy audit - perhaps your state or county will do one of these for free?
1. Momentum, Heat, and Mass Transfer by Bennett and Meyers, McGraw-Hill 2nd Edition