This paper proposes a 18-step back-to-back voltage source converter using four sets of 3-Level converter module with auxiliary circuit to increase the number of steps. The proposed back-to-back voltage source converter has an independent control capability of active power and reactive power at the interconnected ac system. The operational feasibility of proposed system was verified through computer simulations with PSCAD/EMTDC software. The feasibility of hardware implementation was verified through experimental results with a scaled hardware model. The proposed back-to-back converter can be widely applied for interconnecting the renewable energy source to the power grid.