The insulation is a sprayed foam called polyurethane. The insulation is referred to as “spray foam” because of its installation method. As seen in the picture below, the insulation is blown into place where it clings to the wood surfaces and expands. This method offers substantially more resistance to heat transfer (referred to as R-Value) when compared to the commonly used batt insulation. This construction method is similar to Structurally Insulated Panels, or SIPs for short. SIPs are prefabricated wall units which are comprised of high density rigid foam insulation (most commonly polyurethane) sandwiched between to sheets of sheathing (commonly OSB or fiberboard). The best thing about SIPs is the lack of thermal bridges. Thermal bridges are created when a direct path is given through which heat can be transferred (aka through wall studs). SIPs have no thermal bridges because the loads are transferred through the sheathing, not through studs or other areas where insulation cannot be placed. If a scenario arises where more structural support is needed, studs can be placed to help carry a heavier load (from solar panels on the roof for example), but again SIPs effectiveness means that the studs can be spaced further apart when compared to standard construction.
The insulation should offer an overall wall R-Value of aproximately R-15. As you may see in the picture above, after the exterior sheathing is applied there will be an air gap between the exterior sheathing and the insulation. This will make the overall R-Value of the wall assembly drop because there will be air moving around behind the exterior sheathing where there should be insulation. To overcome this problem, one common solution is to put up the exterior before spraying the insulation. A circle is then cut out of the exterior sheathing and the foam is then blown in. This method insures that foam fills ever corner and thus maximizes the possible R-Value of the wall assembly. Another common solution would be to spray the foam without the exterior sheathing on and wait for the foam to expand past the joists (that would be the plane were the exterior sheathing should be), then cut off and disregard the excess foam. This should create a relatively even surface in the insulation after which the exterior sheathing is attached. This method, while often successful, generates much more waste. This can become an issue both in terms of efficient construction practice and cost.