Cascaded H-bridge (CHB) is widely used for its advantages of modularization, simplification and multi-level output. The power direction of each H-bridge in the CHB converter and its power imbalance range are affected by the DC side voltage. The DC voltage or power will be out of control when the unbalance of CHB power is out of this range. In this paper, detailed analysis and derivation on the exact stable operating range of two-cell cascaded multi-level converter (2C-CHB) is developed according to DC voltage settings. The operation of 2C-CHB is discussed in detail according to the power direction and the maximum output fundamental voltage of the H-bridge compared to grid voltage. By this analysis, the stable operating range of CHB based photovoltaic systems and energy storage systems can be calculated according to DC voltages of the CHB, among which the CHB is controlled to work in stable operating range in order to improve system performance. Finally, the correctness and feasibility of the method are verified by experiment.