Hardware implementation of controllers for modular multilevel converter voltage source converters is a non-trivial task, which requires a thorough evaluation of the real-world performance of control hardware. This paper presents a new processor-in-the-loop system developed at The University of Manchester which enables real-time evaluation of power converter control algorithms implemented on a target hardware platform from within a PSCAD/EMTDC simulation. The developed system has been used to measure the execution times of sorting algorithms implemented within the capacitor balancing control loop of an MMC. The system is a low-cost alternative to commercial real-time hardware-in-the-loop systems, and can be used to bridge the gap between offline simulation and final controller implementation in hardware. The developed system can be extended to support any control algorithm of interest, implemented on a wide range of target hardware platforms which may include: embedded microcontrollers, digital signal processors, and field-programmable gate arrays. Applications include control systems for power electronics connected to power systems including HVDC, renewable energy and smart grids.