A system and method are provided for damping power system oscillations in a power system network having one or more local inverter-based generators within a plant, the plant connected to a grid at a point of intersection (POI). The system and method include a plant-level controller or local controller that receives one or more grid signals having a characteristic indicative of a power system oscillation. The plant-level controller or local controller generates an auxiliary signal from the grid signals that is used by the local controller of the inverter-based generators. At the local controller, the auxiliary signal is used to modulate reactive power output from the inverter-based generator to change a voltage at the POI, the voltage change damping the power system oscillations.