Quoted:
Looks nice but you're heading for trouble. Batteries need to have an inch along each side to allow for airflow to keep heat from building up
Unless he's recharging them rapidly or powering a load that draws hundreds of amps, there's not going to be much heat buildup. And, having them in an insulated compartment could be an advantage in some situations - Keeps 'em warmer in the winter, so they don't lose as much effective capacity when the outside air temperature drops overnight.
as well as keeping in the hydrogen gas mix they will give off during duty cycles
The hydrogen is vented through holes in the battery caps, not via diffusion through the walls of the battery case.
Any battery compartment can have problems with hydrogen accumulating, insulated or not. The key to preventing it is ventilation, not lack of insulation.