705.12(B)(2)(3) says that the answer is 100A plus 125% of inverter output.
I lost you here, it's 2017 705.12(B)(2)(2) or 2020 705.12(B)(2) that tells you how to interpret 240.21(B)'s "the rating of the overcurrent device" language when there are multiple sources of supply.
Consider also that if there's a fault, A, B and C are all the same in terms of how much fault current could feed the fault. So if it makes sense to consider 'B' a tap, why not A and C?
tl;dr Just skip to the last sentence of the body.
I think the fault current discussion may be a (potentially informative) tangent. It seems to me that what this boils down to is how to interpret the first sentence of 240.21 when there are multiple supplies: "Overcurrent protection . . . shall be located at the point where the conductors receive their supply except as specified . . ."
Circuits can be divided up into segments where each segment has connections at just its two ends. [And I'll assume the one line diagram is a tree (a graph with no loops); parallel conductors can be considered a single segment.]. When there's just one supply in the system, then one end of any segment is the supplyward end, and you can follow the graph upstream to the first OCPD. That OCPD is protecting the segment and determines if the above 240.21 requirement is met.
How should this be applied when there are multiple sources of supply? Article 705 is supposed to tell us, but it's not very explicit. For the case of two supplies in the system, some segments will still only have one source of supply at one end (i.e. following that end upstream will hit an OCPD before hitting a segment with multiple sources of supply), no problem. Otherwise, a segment can either have (1) two sources of supply, at opposite ends, or (2) two sources of supply, both connected to one end.
For case (1), such as segments A and B, I'm going to posit that the only plausible option is to apply 240.21 to each source of supply separately. I can't think of any other procedure or way to interpret things; I'm curious to know if there's some option I'm overlooking. So iegment A always complies with the basic 240.21 requirement and we don't have to look at 240.21(B). Segment B complies with respect to the PV source but may not with respect to the utility source, so for the latter 240.21(B) may be required. [Whether 705.12(B)(2)(2) applies to segment B in this case is an interesting question. I guess by the letter of 705.12(B) it does, but is there a fault condition that causes a conductor segment to simultaneously carry current from both sources?]
So that brings us to case (2), such as segment C. Before we look at 705, a few possible ways of applying 240.21 come to mind. We could say "there needs to be an OCPD at the end with two sources of supply to comply with the basic 240.21 requirement; otherwise, look at 240.21(B)." Or we could say "obviously we had better add the OCPDs upstream towards each source of supply, and treat the segment as if it had an OCPD of the resulting size at the end; then apply 240.21". Or maybe there's some other way I'm not thinking of?
Now we look at article 705, and it provides guidance on how to interpret 240.21 for case (2). 705.12(B)(2)(1)(a) directs us to the second interpretation, rather than the first interpretation. Great. 705.12(B)(2)(1)(b) is presented as an alternative allowance, where OCPD distance is unspecified and therefore unlimited. So my argument boils down to "since 705.12(B)(2)(1)(b) is presented as an alternative to 705.12(B)(2)(1)(a), which tells us how to interpret 240.21, it is itself an alternative to 240.21."
Cheers, Wayne
PS If the above is the correct intention, I totally agree that 705.12(B)(2)(1)(b) could be a lot clearer, or that 240.21 should have an explicit subsection referencing 705.12(B)(2)(1).