Explain the operation of Modular Multilevel Converters (MMC).

MMC consists of series-connected submodules, each containing a half-bridge and capacitor. Inserting or bypassing submodules creates voltage steps. Each arm has N submodules; total DC voltage = N*Vcap. Benefits: excellent scalability to any voltage, low harmonics, low dv/dt, redundancy through bypass, and transformer-less operation at any voltage. Control challenges include: capacitor voltage balancing (sort by voltage, select appropriately), circulating current suppression, and arm energy balancing. MMC dominates HVDC transmission and is expanding to STATCOM and medium-voltage drives.