Cascaded H-bridge (CHB) inverters are preferred for photovoltaic (PV) applications due to its modularity and also they produce high quality output voltage and current, which is an important criteria for grid connection. Partial shading, damage of PV cells, aging effect etc., in a PV system causes reduction in the PV power. In a PV system connected to single phase grid with a CHB inverter, this reduction in PV power creates power imbalance issue. This power imbalance causes some of the H-bridge modules (HBM) to undergo overmodulation resulting in a distorted grid current. Under this condition, to estimate the amount of power that can be extracted without letting any HBM cross the linear modulating region, an optimization based approach is presented in this paper. Simulation results are included to support the proposed concept. © 2021 IEEE.