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Same in my home. I used 1" styrofoam installed with construction adhesive. (I should have used 1.5") Don't skimp on the adhesive. Then I reinstalled the paneling using the same glue/adhesive. The hard part was trimming around the windows and any areas where the foam edges showed. Just come up with a molding or other idea that works. I didn't have electrical outlets to worry about on the exterior wall so that wasn't an issue.