The blocking diode has nothing to do with holding the voltage down. What it does is keep the battery from spinning the motor, discharging itself in the process. Current can only go from the motor to the battery, not the other way around.
What limits the voltage is the battery:
- The voltage produced by the motor is proportional to its speed.
- The current out of the motor is proportional to the EXCESS of its voltage over that of the battery plus the diode voltage drop, divided by the wiring resistance (including the motor's coils).
- The load on the shaft is proportional to a constant times the current out of the motor.
So once the motor spins up to where it's generating 13.5 to 14 volts or so, the current into the battery causes the motor to put enough load on the shaft that it stops speeding up. Turn up the water pressure so the water is pushing on the shaft harder, the motor will speed up a little bit - enough to push a bunch more current into the battery - and that extra current will put a bunch more load on the shaft and keep it from speeding up more than the little bit.
The battery's voltage is nearly constant - rising only a tiny bit with increasing charge and with increasing charging current.
So the battery regulates the motor's generating voltage by regulating its mechanical load on the water turbine. See?