Power electronic transformer consisting of power converters and a high frequency transformer (HFT) can be used to interface a low voltage machine to a high voltage grid. A modular multilevel converter (MMC) is proposed as the power converter on the high voltage side to generate high frequency, adjustable magnitude sinusoidal voltages. A matrix converter (MC) is used on the low voltage side to synthesize three-phase adjustable frequency PWM AC at the machine terminals. With the leakage inductance of the transformer, a capacitor bank forms an LC filter to result in sinusoidal currents through the HFT. With sinusoidal voltages and currents through the transformer, there is significant reduction in transformer losses and also natural commutation of leakage energy is obtained. The magnitude of the output voltage requirement by the machine is met by controlling the output voltage of the MMC on the primary of the HFT, to result in reduced voltage stress and losses in the transformer, secondary side converter and the machine. The operating principle, modulation and control of the proposed PET is validated by simulations in MATLAB/Simulink.