For the thin film capacitance used in voltage source converter based HVDC (VSC-HVDC) projects, the capacitance attenuation is the major criteria of capacitor aging and health. By overviewing the typical capacitance estimation method, two main errors of measurement data in practical engineering are analyzed focusing on the modular-multi-level (MMC) HVDC valve: the AD noise of capacitor voltage and arm current feedback, and the synchronization error between arm current and power cell status. Based on the measurement error analysis, a new online capacitance estimation method is presented using least square method, which takes into account the switching states of Nearest Level Modulation. The average capacitor voltage is calculated when the power cell is switched out, and the arm current is integrated when the power cell is switched in, so that the impacts of AD noise and synchronization error are minimized. The results of simulation comparison with the other two methods verify its accuracy and low sensitivity to measurement error, and it is suitable for industrial projects due to its simplicity and low computational efforts.