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This paper presents a new discontinuous PWM strategy for three-level inverters to achieve both neutral-point voltage balancing and switching loss reduction. Unlike the conventional unipolar or space-vector PWM, the proposed PWM strategy can maintain the two properties over any modulation index and load power factor. The viewpoint of double-carrier-based modulation is used as the basic framework to develop the PWM theory of the three-level inverter and to generalize several concepts familiar in the two-level inverter. Further improvement on voltage distortion is achieved by blending the proposed discontinuous PWM with the conventional unipolar PWM.