In order to solve the poor economy, long power supply radius, and low voltage quality problems in the operation of the distribution network in sparse and remote areas, a compensation method of active/reactive power and voltage based on power electronic voltage regulator is adopted to achieve the extension of power supply radius and adjust the voltage accurately and quickly. Then, in order to reasonably configure the role of power electronic voltage regulator in the distribution network, a bi-level optimization model for its location and capacity is designed. The upper layer of the optimization selects the best installation positions by considering the power flow sensitivity factor as the main factor and the voltage stability index as a supplement. The lower layer considers the voltage stability and economy to determine the optimal installation capacity. Finally, an example is given based on the improved IEEE33 node of the distribution network in sparse and remote areas. The optimal value of the model is solved by utilizing the dynamic inertia weight particle swarm optimization algorithm. It is proven that the feasibility and effectiveness of the configuration method.