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This paper presents a new voltage balancing control for the diode-clamped multilevel rectifier/inverter system. A complete analysis of the voltage balance theory for a five-level back-to-back system is given. The analysis is based on fundamental frequency switching control and then extended to pulsewidth modulation (PWM). The method involves obtaining optimal switching angles; a process that is described in detail herein. The proposed control strategy regulates the dc bus voltage, balances the capacitors, and decreases the harmonic components of the voltage and current. Simulation and experimental results demonstrate the validity of the optimizing method and control theory.