In this work, we explore the intricacies of the potential‐temperature variance budget in coastal fog. We propose an improvement to the theoretical framework of the budget, whereby we include the heat exchange due to water‐phase changes. We then show this framework's consistency with a real‐world case study from the Coastal Fog (C‐FOG) Research Program. Results show that the presence of intermittent energy bursts is driven by the sudden turbulent injection of heat into the environment caused by the condensation of water vapour, and the improved theoretical framework proves satisfactory in detailing the observed process. The heat excess is transported vertically, creating a two‐term balance of high‐order moments. A bulk parametrization of this balance is also proposed to provide a simplified representation of the phase‐change process and suggest that it could be used for operational purposes. Finally, the length‐scales of the processes are evaluated from the parametrizations. The analysis indicates that the scales of the phase change of water vapour are consistent with the buoyancy production and Taylor scales.