Question

why small capacity generators (such as micro hydro plants) are not considered as PV buses

Answer 1

small capacity generators (such as micro-hydro plants) have very little inertia ( sometimes it is called synthetic inertia) and cannot supply sufficient reactive power required to inject constant active power keeping its voltage at the fixed level. That is why the buses with small capacity generators injecting active power to the system are often modeled as negative PQ load [ active (or, reactive) power injection at a bus  = - active (or, reactive) power absorbed at the bus]. Hence, for the purpose of Power Flow studies, the corresponding bus is treated as PQ bus - not PV bus.