A study of a photovoltaic (PV) array and inverter system installed in San Diego, California, was conducted in order to determine the energy losses due to inverter saturation (capping of inverter power output due to the PV array power output exceeding the inverter maximum power rating). Two mechanisms of saturation were considered: cloud enhancement (refers to an increased diffuse component of irradiance caused by clouds surrounding the unobstructed solar disk) and clear sky exceedance. For inverter sizing ratios (defined as R = inverter maximum AC output rating/PV DC rating) of R = 0.81 and R = 0.87 the annual energy losses as a percent of annual energy production were 2.65% and 2.20% using 1-s measurement resolution. Annual energy losses were calculated by aggregating the difference between modeled power (assuming no saturation occurred) and measured power. Losses due to cloud enhancement dominated the total losses, especially for R = 0.87. Increasing inverter size reduces saturation losses during high irradiance conditions, but decreases inverter conversion efficiency under low irradiance conditions. Increasing the sizing ratio to R = 1.22 would result in a maximum amount of energy production at our site. Averaging on timescales from 1-s to 1-h was performed to demonstrate that cloud enhancement losses can only be quantified using 10-s or finer measurements. (C) 2011 Elsevier Ltd. All rights reserved.