This paper presents a new design and implementation of a three-phase multilevel inverter (MLI) for distributed power generation system using low frequency modulation and sinusoidal pulse width modulation (SPWM) as well. It is a modular type and it can be extended for extra number of output voltage levels by adding additional modular stages. The impact of the proposed topology is its proficiency to maximize the number of voltage levels using a reduced number of isolated dc voltage sources and electronic switches. Moreover, this paper proposes a significant factor (FC/L), which is developed to define the number of the required components per pole voltage level. A detailed comparison based on FC/L is provided in order to categorize the different topologies of the MLIs addressed in the literature. In addition, a prototype has been developed and tested for various modulation indexes to verify the control technique and performance of the topology. Experimental results show a well-matching and good similarity with the simulation results.