Cable size considerations
Intro
Sizing cable for a 12V system is more than just grabbing the roll that looks about right.
there are 3 key considerations to be made: the current the circuit will actually pull, the ambient temperature it has to live in, and the big one for extra low voltage systems, voltage drop.
Current
Current is the flow of electrons through a cable, measured in amps (A). Push current through a conductor and you get heat, because no conductor is perfect. Every wire has some resistance pushing against the current flow, measured in ohms (Ω), and that resistance turns a slice of your power into heat. The relationship is P = I²R, where P is the heat in watts (W), I is the current in amps and R is the cable's resistance in ohms. Note the square: double the current and you quadruple the heat.
So sizing a cable for current is really a heat question. How much heat is the cable making, and how fast can it shed it into the surrounding air? The ceiling is almost never the copper itself. It is usually the insulation, which softens and melts long before the conductor cares, or whatever the cable happens to be lying against.
Push it hard enough and the copper does eventually let go. In a serious overcurrent the conductor can melt and the insulation can burn. That is exactly what fuses and circuit breakers are there for: to open the circuit before the cable catches fires or melts.
Ambient temperature
A cable does not shed heat into nothing. It sheds it into whatever is around it, and how fast it does that depends on the temperature difference between the conductor and its surroundings. Warm the surroundings up and you shrink that difference, so the same current now leaves the cable running hotter.
The cable has not changed. Its resistance has not changed. The heat it produces is the same. It just has nowhere to dump it.
This is where vehicles catch people out. A cable run under the ute tray might sit at a comfortable 30°C, but the same cable in the engine bay of a running vehicle on a summer day can easily see 60°C or more, and next to a turbo or exhaust it gets worse. Same cable, same current, less capacity.
The answer is simply more copper. A bigger conductor has lower resistance, so it makes less heat for the same current and stays inside its limit even when the surrounding air is not helping.
Voltage drop
Voltage drop is the most overlooked consideration in an electrical system, and in an extra low voltage system it is the one that will ruin your day. Here is why it hurts so much. A given cable carrying a given current drops the same voltage whether it is fed from 240V or 12V. Ohm's law does not care what the supply is. But 1V out of 240V is a tiny difference that no load will ever notice, while 1V out of 12V is over 8% of everything you have, and your gear absolutely will notice.
It is worse than that. Loads are specified in watts, A 600W load on 240V pulls 2.5A. The same 600W load on 12V pulls 50A. Twenty times the current through the cable, which means twenty times the voltage drop on top of already having twenty times less voltage to lose. That is the double whammy that catches people out.
Loads do not consume current, they consume voltage. This is the mental model that makes voltage drop click. Current is not used up. A load with 5A flowing in has 5A flowing out, every time. What changes across the load is voltage. That is what actually gets consumed.
And in a real system, your cable is part of that load. It is a resistor sitting in series with the thing you actually wanted to power, quietly taking its cut of the voltage before anything useful happens.
Which is also why voltage drop is so easy to miss when testing. Put a multimeter on the far end of a long cable with nothing switched on and you will read the same voltage as the source. No drop at all. Voltage drop only exists while current is flowing, so it only shows up under load.
The dimming lights test. Ever switched on the winch, the inverter or the compressor and watched the lights dim? That is voltage drop happening live in front of you. Current goes up, drop goes up in proportion, and everything else on the system sees less voltage and sags.
Worth knowing: the cable is not the only culprit. Every crimp, terminal, fuse holder, switch and busbar has resistance, and so does the battery itself. Cheap fuse holders and bad crimps are responsible for a huge share of the drop in a typical build. Lithium batteries have very low internal resistance and so they hold a high voltage while supplying large loads, while a tired lead acid will have a significant drop before you even hit the cable.
The good news: while it can be hard to measure it is easy to calculate unlike current carrying capacity which needs derating factors, ambient temperatures, grouping and a fair bit of judgement. Voltage drop needs two numbers.
Vdrop = I × R
where I is the current in amps and R is the resistance of the circuit in ohms [Ω]. cable resistance is a fairly consistent and well known figure. but you could also measure the resistance from one side of the circuit to the other and calculate the voltage drop at worst case scenario.
so how do we know how much voltage drop is acceptable. Zero drop would be ideal but needs zero resistance, so it is off the table. Instead we work in percentages of the supply voltage, because a percentage scales sensibly across different voltage systems where a fixed volt figure does not.
For extra low voltage systems there are two numbers in common use.
10% is the ceiling. On a 12V system that leaves you 10.8V at the load. A simple LED light strip will run happily on 10.8V and look near enough identical to how it looks on 12V, so there is no sense hauling around heavier, more expensive, harder to route cable to run it.
3% is what you use for anything with a brain. On 12V that is a drop of just 0.36V, leaving 11.64V at the load. Fridges, inverters, DC-DC chargers and battery management systems all watch their input voltage and use it to decide whether the battery is flat. They cannot see your battery, they can only see what arrives at their terminals. Give a compressor fridge 10.8V and it will call that a dead battery and shut down to protect it, even with a fully charged battery two metres away. Inverters do the same thing, usually with an alarm. So these loads get the fat cable to reduce the resistance, compared to a load that has the identical current but with a 10% voltage drop.
Worth a note on which voltage you take the percentage from. A "12V" system rests around 12.7V and charges at 13.8V to 14.4V, so calculating against 12V nominal is the conservative choice, which is exactly what you want.
Extra low voltage cable sizing calculator