This paper studies the behaviour of the gridconnected modular multilevel converter under unbalanced grid conditions in terms of the energy imbalances within the converter, and proposes a novel approach for dealing with imbalances. Since the energy content within the arms of modular multilevel converter depends on the interaction between the terminal and internal voltages and currents, standard energy control methods, designed mainly for balanced grid conditions require improvement. This paper proposes a novel approach for the direct arm energy control, valid for both balanced and unbalanced grid conditions. The approach is characterized with its simple implementation, minimization of the current stress imposed on the converter, as well as with minimization of the risk of overmodulation. Theoretical foundation for mitigating the problem are supported with the simulation results, thus verifying the validity and performance of the proposed control concepts.