This type of tap is ok this is not really a line side tap. A line side tap is one before the main breaker at the service entrance. In your scenario you will still have the issue of max 20% rule of the feeder. The theory is you don't want to overload the wires or buss. For example if you have a 100 amp panel and you backfeed with 100 amps of PV. You have the potential of using 200 amps through that 100 amp panel. You will burn up the buss.
In your case one could argue that at the 400 amp service you could draw 400 amps through the main and 200 amps through the sub feeder. You still should max out at the 20% rule
I am sorry if I appear dense, but I don't think we are communicating. The service is (if the person who reported it to me did so correctly) not through a 400A panel, it is through a 400A disconnect. The disconnect directly feeds a number (I do not know what the number is) of lesser disconnects, and the one in question is a 200A disconnect, which in turn feeds a 200A panel. There are no panels and therefore no busbars or loads between the proposed tap and the meter.
The wire is sized for the 200A feeder to the panel, and is protected at the panel by the panel's main breaker. The most the PV inverters can supply to the feeder is 160A (it is less than that by 20%, actually, but let that slide).
Does this crude "drawing" make sense?
Meter---400A disconnect (not a panel)---200A disconnect (not a panel)---TAP---200A panel
I do not see how the tap's 160A contribution to the feeder can ever push the current in the wire over 200A. No scenario I can imagine has more than 200A flowing through any part of the feeder.
Scenario: The panel is fully loaded at 200A and the PV is putting out 160A. The current in the feeder between the tap and the panel is 200A and the current in the feeder between the 400A disconnect and the tap is 200A-160A = 40A in the direction of the panel.
Scenario: The panel is half loaded at 100A and the PV is putting out 160A. The current in the feeder between the tap and the panel is 100A and the current in the feeder between the 400A disconnect and the tap is 100A-160A = (-)60A in the direction away from the panel.
Scenario: The panel loads are all off and the PV is putting out 160A. The current in the feeder between the tap and the panel is 0A and the current in the feeder between the 400A disconnect and the tap is 0A-160A = (-)160A in the direction away from the panel.
Scenario: The 400A disconnect is open. The PV shuts down and there is no current anywhere in the feeder.
I understand the 20% rule, but I don't see how it applies here any more than it does to a "normal" line side tap.
Aside: I do not wish to appear argumentative, but this is a real world situation and I need to get it right. If I am missing something I would sincerely appreciate your guidance.