A method for operating a wind turbine power system that supplies real and reactive power to a grid includes operating a generator of the wind turbine power system up to a first speed limit. The method also includes monitoring a wind speed at the wind turbine power system. When the wind speed drops below a predetermined threshold, the method includes reducing the first speed limit of the generator to a reduced speed limit of the generator. Further, the method includes operating the generator at the reduced speed limit for as long as the wind speed remains below the predetermined threshold so as to optimize a tip-speed-ratio of the wind turbine power system during low wind speeds, thereby increasing power production of the wind turbine power system at low wind speeds.
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