What is overloading?
Overloading is when you install a solar array that has the ability to generate more electricity than your inverter’s maximum output capacity. For example, a system that has an inverter that’s “25% overloaded” (or 125% loaded) would mean the DC array size is 25% larger than the AC rating of the inverter.
Inverters are power electronics devices which give maximum efficiency when input power is close to 90-100% of the inverter’s rated power. As we know that the modules in the field are subjected to higher ambient temperatures (as compared to Standard Test Conditions(STC) at which they are tested) which leads to degradation in output of the modules due to heat, we can balance this loss by putting in extra DC power to harvest higher DC energy which also helps inverter work at max efficiency.