The present disclosure is directed to a system and method for improving reactive current response time in a renewable energy power system connected to a power grid. The method includes providing, via a controller of the power system, a permissive logic relating to the power grid. Another step includes determining, via a controller of the renewable energy power system, a reactive current reference command for the renewable energy power system in response to the permissive logic being satisfied. The method also includes generating, via the controller, a reactive current pulse command for the renewable energy power system. Thus, the controller is configured to determine a total reactive current command by combining the reactive current reference command and the reactive current pulse command. Further, the method includes operating the renewable energy power system based on the total reactive current command so as to improve the current response time.