In general, fitting insulation to the outside of a solid wall means that the solid wall then acts as an interior 'thermal mass' - giving better heat storage and so regulating the temperature at a more stable level. This external method might be more expensive than standard internal dry-lining, but the advantages of gains from the extra thermal mass should be taken into account in the long term.
External insulation can involve putting up external timber studwork that can be filled with insulation. This is then covered with a moisture-proof building paper and finished with timber cladding, or lath and render, or hung tiles. Interstitial condensation may occur if an air gap is not left, so outside the insulation would be a cavity, then mesh or board, then render. If the existing render is defective and causing dampness it may be an idea to move it but this is a lot of work, it depends if its removal will make the wall breathable (i.e. if it's cement). The lime render will work well as a rain shield but it is important to let the insulation shed its moisture down the cavity.
Otherwise, a more basic way to add external insulation would be mineral wool batts fixed to the wall with an expanded metal lath. This lath would then be finished with a cement / lime / sand render. It is possible to use straw bales as insulation on the outside of concrete block walls. The bales can be rendered in the same way as for a standard strawbale building.
Some practical tips:
Solutions are usually available as a package - with fixings, render, mesh, membrane, etc, that work with a particular insulation material to ensure a robust finish (e.g. so you don't get cracks, damp ingress, etc). There are screw & plastic plug fittings of various kinds used to fix insulation to the wall, and particular renders that will adhere to the material being used. See manufacturers' websites for guides and advice.
Plastic foam insulation designed for external use will not have foil backing (as you don't want a vapour barrier). It is possible to use standard mineral fibre batts as external insulation - fitted between timber uprights and with a board finish (perhaps wood-fibre) to give the surface to render onto.
The detailing for external wall insulation is generally less complex than for internal, but will involve issues such as avoiding 'cold bridges' at window and door edges. Thin sections where wall meets frame can sometimes be left uninsulated, causing a cold bridge at this point, which can then lead to condensation and mould, as it will be the coldest point in the room. To address this, insulation can be overlapped with the window frame. You should be able to find images or illustrations of this in the manufacturers guides or other online sources.
It can be easier with some materials to do the detailing at doors & windows (e.g. those that are more rigid and can be cut to shape), but it will need a certain amount of precision to get it right – both the material and the skill of the installer will be factors. You could check with the installers to see how the detailing at windows and doors will be carried out, to ensure that they will avoid cold bridges.
With external insulation, the amount of overhang from the existing roof will be important. if there is very little overhang then the roof timbers will need to be altered and extended. In an extensive refurbishment project, this could be combined with insulation of the roof space, perhaps also adding solar panels.
At the top of the insulated external wall, installers may use a plastic channel to protect the edge. This is just an inverted U shape that will generally be sealed to the wall with silicon mastic to prevent water getting between insulation and wall. This needs to be very well done to ensure a good finish. For a more certain water-proof finish, you can cut into the wall and add flashing out over the insulation.
Our short course on eco-refurbishment gives a lot more advice and hands-on experience for those interested in renovating a house and adding good levels of insulation.
If you want to find a builder who is knowledgeable about 'eco' building materials, try the Association for Environment Conscious Building (AECB) to find someone based near to you.
There is some more information on these webpages:
These websites also have information and examples of renovation projects: