Energy storage system can significantly improve the power quality and power supply reliability of microgrid. In high power applications, multilevel power converters are usually used to reduce the voltage stress of the switching devices and batteries. Modular multilevel converter (MMC) has the advantages of high power and voltage level, and can block DC fault. It is very suitable for the topology of high capacity energy storage converter (ESC). However, the control of the MMC-based ESC is a multiobjective optimization problem, for the fast dynamic and stability of AC bus, the normal operation of the multilevel converter, and the health of the batteries must be considered at the same time. To effectively solve this problem, a hierarchical control algorithm is proposed in this paper. The algorithm consists of three layers. The system layer suppresses bus voltage/frequency fluctuation and adjusts the operating state of the ESC. The converter layer is responsible for the normal operation and state regulation of the MMC and the dual active bridge (DAB). The battery layer regulates the battery state of charge (SOC) and charging/discharging current. In addition, a real-time priority adjusting strategy is also introduced to change the operating mode of the ESC to further improve the overall system performance. Simulation results of a five-level MMC-based ESC verifies the effectiveness of the proposed control algorithm.