AC oversizing penalty has 4 major factors:
1: Poor humidity removal during part load conditions. Those humid days in the 80's people will turn their AC down to 70 or below to get humidity relief. A smaller AC will pull the humidity without overcooling as much.
2: Uneven temps in between cycles. A cold blast of air followed by a stuffy humid feeling. Happens each cycle, customers end up fiddling with the thermostat constantly.
3: Ductwork unable to deliver needed CFM. A big one, system will only deliver the amount of cooling the ductwork can handle. Customer stays comfortable because all the capacity isn't needed to begin with. They just pay higher utility bills.
4: Cycling efficiency. It takes 5-10 minutes before pressures stabilize and the system is operating at it's rated EER. oversized systems cycle more often and spend less time in the efficient operating zone.
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