Abstract: The unified power flow controller(UPFC)plays a significant role in improving power transmission capacity and power system stability, which represents the highest level in flexible AC transmission system technology. Since the UPFC project in Nanjing western grid was built, the uneven flow distribution of the north and south transimission passage of the western grid has been well improved. However, when the compensation voltage of the series side converter is low, there would be a higher harmonic level of AC voltage, which is harmful to the voltage quality. In this paper, the harmonic characteristics of MMC-UPFC with different modulation ratio have been studied, and a new dual-threshold hybrid modulation scheme based on nearest level modulation and carrier disposition PWM with virtual loop mapping is proposed, which is aimed at improving the harmonic characteristic of MMC-UPFC under low modulation ratio. Taking the actual engineering parameters of UPFC in Nanjing western grid as the case, the applicability and effectiveness of the proposed scheme are verified by theoretical analysis and simulation results.