Retrospective shed insulation

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I'd be inclined to not add insulation between the walls due to the damp risk, especially not loft type as it would slump. The foil/bubble wrap insulation added over the wall battens would help speed up the heating and also provides the vapour barrier if you follow the guidelines. You could add roof battens over that and then add the osb over the top and you've got a more cost effective option.
Another thought on heating, have you considered going down the diesel burner type? They appear to be very cost efficient and offer upto 8kw output so would get the temperature up very quickly. You'd obviously need an electrician if you're not confident in doing that work as they're intended for motor homes so use a 12 vault supply. That's the route I'm going down, i looked at getting a log burner but the diesel heaters seem to be a much better option.
You really do need a breathable membrane between the outside wall and any insulation. Unless you do this your insulation will get wet over time and cause damp or worse still rot to start in the outside panelling and structure. Your best bet would be to cover the inside with breathable membrane, stapled to the inside of the frame, so you have the thickness of the frame as an air gap. Then you will need to put new battens inside at a suitable spacing for you chosen insulation. Personally I would use Rockwood batts. These will not slump and are easy to cut to shape. Then put your inside covering over the top. I have used chipboard flooring sheets, strong water resistant and cheap. I know you don't want to go to the expense and trouble, but at the end of the day this method is the only proper way to do it and avoid long term problems. Also if you intend to use a wood burner you MUST provide suitable vents to enable it to draw air in, otherwise it will suck all the oxygen out in no time. Someone mentioned diesel burners. These are excellent. I have two 8kw units in my workshop, which is 10 x 8m and 3m high. As an aside you could save yourself a lot of expense by just not insulating the walls at all. My shed has a 25mm gap between featherboards and a breathable membrane. The frame is 4x2 with chipboard flooring panels as the internal cladding. I have no insulation in the walls, but 6 inches in the roof. No issues with damp and it heats up very quickly, and hold the heat well. I have numerous machine tools which feature a lot of bare steel and have never had any issues whatsoever with damp or corrosion.
 
Please don't use rockwool, or other fibre products, as if you get any penetration of the weatherboarding, the insulation will hold water and not dry out. This is worse than no insulation. We actually have this problem in our house built 1986 - rockwool in the cavity is wet caused by shoddy building; NHIB refused to resolve. At last can afford to get it replaced. Use a waterproof board material, spaced away from the cladding and stuck with gunned adhesive, and make this gap vented to the outside, probably from underneath and under the eaves, would be the easiest solution. Membrane and battens as above better, and fibre batts now OK. Think about a dehumidifier, but not the compressor type which do not work well at low temperatures. Cost you about £200 and will keep all rusting at bay.
 

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