If your solar array produces a maximum of 1,250 kiloWatts (kW) of DC power, you would typically install a 1,000 kW inverter. The ratio between the DC solar array and the AC inverter is called the Inverter Load Ratio (ILR). In the case described here, the ILR is 1.25, since 1,250 ÷ 1,000 = 1.25.
There is an occasional chance when the solar array system is installed with an ILR of 1.25, under perfectly circumstances of 1000 Watts per square meter of solar irrandiance and an air temperature of 25°C, that a solar array produces 25 percent more electrical power than the inverter’s power rating. In this scenario, some inverters will regulate power to its maximum limits and “clip” or reduce the maximum potential of the photovoltaic (PV) system. The inverter clips power typically by regulating the DC voltage to a higher level which reduces the incoming current it will process. When you look at the system over its lifetime, power clipping will only lose zero to one percent of power due to inverter clipping with a 1.25 ILR.
All credit goes to Blue Oak Energy, http://www.blueoakenergy.com/