Series connections of modules in cascaded multilevel converters are prone to power imbalances due to voltage differences on their DC side. When modules are connected to direct current (DC) sources, such as photovoltaic panels, the capability of withstanding power imbalances is crucial for generating the maximum power. In order to provide a possible solution for this requirement, this paper proposes a control strategy called Quadrature Voltage Compensation, which allows a wide range of power imbalances. The proposed control strategy regulates the power by introducing a circulating current between the arms and a phase angle in the output voltage. The impact of the circulating current and its effect on the phase voltage are studied. To highlight the features of the proposed strategy, an analytical model based on vector superposition is also described, demonstrating the strong capability of tolerating power differences. Finally, to validate the effectiveness of the Quadrature Voltage Compensation, simulation and experimental results are presented for a three-phase isolated multi-modular converter.