Abstract: With the widespread integration of distributed photovoltaics (PV) into rural power grids, the grids are confronted with challenges such as overvoltage, PV curtailment, and reverse power flow. Aiming at the problems of limited storage capacity and insufficient regulation capacity of some diversion-type small hydropower stations in Southwest China, this study proposes a storage capacity expansion method based on reconstruction of the diversion canals and forebays, and constructs a comprehensive optimization model that balances regulating performance, economic benefits, and investment payback period. Through the technical approach combining "canal bottom excavation and forebay heightening", the effective regulating storage capacity is significantly increased on the premise of not changing the original main structure of the hydropower station. By comparing multiple capacity expansion schemes, two schemes are finally selected: 2 m heightening of the forebay (with an effective storage capacity of 1146.41 m³) and 3.69 m heightening (with an effective storage capacity of 2340.28 m³), both of which exhibit excellent regulating capacity and economic performance. For the scheme of 2 m heightening, the shutdown regulation time of the hydropower station is 100 minutes in the dry season, 33.53 minutes in the normal flow season, and 15.89 minutes in the flood season; for the scheme of 3.69 m heightening, the shutdown regulation time is 209.73 minutes, 70.04 minutes, and 33.19 minutes respectively in the three seasons. Relying on the hydro-PV complementarity mode featuring "PV priority and hydropower regulation", the hydropower station has achieved effective absorption of PV power. This study provides a promotable technical path and engineering demonstration value for constructing hydro-PV complementarity systems with high-proportion new energy integration in Southwest China.