Heat flows by three mechanisms: conduction, convection, and radiation.

Conduction is the transfer of heat through a solid object. When one part of an object is heated, the molecules within it begin to move faster and more vigorously, when these molecules hit other molecules within the object they cause heat to be transferred through the entire object. The handle on a cast iron skillet gets hot as heat is transferred from the bottom by means of conduction.

Convection is the transfer of heat by the movement of a fluid (water, air, etc.) Hold your hand above the stove and you feel the heat as the hot air rises by means of Conduction. Inside of a wall air removes heat from a hot exterior wall, then circulates to the colder interior wall where it loses the heat.  Forced-air heating systems work by moving hot air from one place to another.

Radiation is a direct transfer of heat from one object to another, without heating the air in between, the same process in which the Earth receives heat from the Sun or a wood stove supplies heat to its surroundings.

With buildings, we refer to heat flow in a number of different ways. The most common reference is "R-value," or resistance to heat flow. The higher the R-value of a material, the better it is at resisting heat loss (or heat gain). U-factor (or "U-value," as it is often called) is a measure of the flow of heat--thermal transmittance--through a material, given a difference in temperature on either side. In the inch-pound (I-P) system, the U-factor is the number of Btus (British Thermal Units) of energy passing through a square foot of the material in an hour for every degree Fahrenheit difference in temperature across the material (Btu/ft²hr°F). In metric, it's usually given in watts per square meter per degree Celsius (w/m²°C).

R-values are measured by testing laboratories, usually in something called a guarded hot box. Heat flow through the layer of material can be calculated by keeping one side of the material at a constant temperature, say 90°F (32°C), and measuring how much supplemental energy is required to keep the other side of the material at a different constant temperature, say 50°F (10°.C)--all this is defined in great detail in ASTM (American Society of Testing and Materials) procedures. The result is a steady-state R-value ("steady-state" because the difference in temperature across the material is kept steady). R-value and U-factor are the inverse of one another: U = 1/R. Materials that are very good at resisting the flow of heat (high R-value, low U-factor) can serve as insulation materials. So far, so good.

Materials have another property that can affect their energy performance in certain situations: heat capacity. Heat capacity is a measure of how much heat a material can hold. The property is most significant with heavy, high-thermal-mass materials such as solid concrete.  As typically used in energy performance computer modelling, heat capacity is determined per unit area of wall. For each layer in a wall system, the heat capacity is found by multiplying the density of that material, by its thickness, by its specific heat (specific heat is the amount of heat a material can hold per unit of mass). Water has a heat capacity of 1 Btu/lb.°F (4.2 kJ/kg°K), while most building materials are around 0.2 to 0.3 Btu/lb.°F (0.8 to 1.3 kJ/kg°K).

If there are various layers in the wall, total heat capacity is found by adding up the heat capacities for each layer (drywall, solid concrete, masonry block, and stucco, for example). In the following section, we will examine how the heat capacity of materials can affect the energy performance of buildings.