Featured Application: The incentive method with flexible contribution functions can be applied to demand response by the reactive power market and distribution company, which has the possibility to reduce the additional installation of distribution control equipment and battery capacity. It also leads to the reduction of total electricity purchase cost of consumers, and the power system can achieve high mixing of renewable energy in the grid with the reactive power incentive demand response and the IoT development. Furthermore, reliability assessment of cooperative control with the participation rate will give an important contribution to the robust design of the system. Abstract: In order to solve urgent energy and environmental problems, it is essential to carry out high installation of distributed generation using renewable energy sources (RESs) and environmentally-friendly storage technologies. However, a high penetration of RESs usually leads to a conventional power system unreliability, instability and low power quality. Therefore, this paper proposes a reactive power control method based on the demand response (DR) program to achieve a safe, reliable and stable power system. This program does not enforce a change in the active power usage of the customer, but provides a reactive power incentive to customers who participate in the cooperative control of the distribution company (DisCo). Customers can achieve a reduction in their total energy purchase by gaining a reactive power incentive, whilst the DisCo can achieve a reduction of its total procurement of equipment and distribution losses. An optimal control schedule is calculated using the particle swarm optimization (PSO) method, and also in order to avoid over-control, a modified scheduling method that is a dual scheduling method has been adopted in this paper. The effectiveness of the proposed method was verified by numerical simulation. Then, simulation results have been analyzed by case studies.