Small hydropower is a crucial renewable energy source in China and plays a significant role in achieving social, economic, and ecological sustainable development goals. However, rapid Small hydropower development has led to various issues, resulting in closure or dismantling of many Small hydropower plants. To maximize the positive impact of Small hydropowers, green transformation and Small hydropower plant upgrades are urgently required. Hence, Small hydropower refurbishment activities are performed to enhance overall benefits. Therefore, this study integrated grounded theory, a qualitative research method, with a comprehensive decision-making trial and evaluation laboratory-fuzzy analytic hierarchy process evaluation model. This formed a new framework to analyse refurbishment activities and was applied in Tangban and Maoyandong plants. Small hydropower refurbishment activity benefits were categorized as internal (direct economic and indirect production benefits) and external (social and ecological benefits), with interconnections and trade-offs. The most critical factors influencing benefits were internal factors, whereas social benefits had a greater influence on external factors. The refurbishment activities at Tangban and Maoyandong were rated high and moderate, respectively, owing to differences in corporate nature, location, and primary business focus. This study not only provides a theoretical model for China’s Small hydropower to achieve the United Nations Sustainable Development Goals under the premise of sustainable operations, but also offers a new global framework for evaluation and decision-making in Small hydropower plants.