I plan on finishing that area because it sits in the main room. I plan on building walls around it with a door.
{{gwi:1386119}}From October 17, 2011

As long as the panel is correctly attached to the structure you can put XPS behind it.

You might want to add a layer of drywall between the panel and the insulation though.

I believe it is properly attached. What is the reason to put drywall between the XPS and panel?

thanks

"What is the reason to put drywall between the XPS and panel? "

XPS is flammable and should be covered.

The electrical panel installation in your photo would not be allowed in my jurisdiction. There would have to be drywall and solid plywood behind the panel and sufficient space on that ply/drywall backing to affix a single duplex outlet.

That's why it's important to check with your local authority before you add or change things.