Hydropower can play a transformative role in supporting the substantial increase in variable renewable energy (VRE) via flexible regulation ability, but the capability of cascade hydropower to buffer VRE is indistinct. This study proposes a systematic framework to assess hydropower capability for integrating VRE considering the peak shaving demands of multiple power grids. A chance-constrained multi-time aggregate model for the integrated hydro-wind-solar operation is established to determine the optimal wind and solar capacity and coordinated operational strategies. An independent hydropower peak shaving operation model is proposed for comparison. The proposed models are recast as mixed integer linear programming formulations based on the proposed solution method. Comparative situation experiments divided by different influencing factors are implemented to analyze hydropower capability for integrating VRE. The results revealed the following: (1) Integrating VRE would reduce the peak shaving effectiveness of hydropower—the lowest load rate decreases to 0.899. (2) Hydropower capability for integrating wind and solar power is affected by hydrological conditions. Hydropower capability is limited under fixed hydrological conditions, and it prioritizes expanding wind power and restricting solar power. (3) Expanding the transmission capacity will increase hydropower capability from 13300 to 17000 MW and enhance peak shaving performance through the increased hydropower contribution.