WASHINGTON (Reuters) -The U.S. Senate tax committee proposed a full phase-out of solar and wind energy tax credits by 2028 but extended the incentive to 2036 for hydropower, nuclear and geothermal energy, which are favored by President Donald Trump's administration, according to a draft bill circulated on Monday.

The language released by the committee chair, Republican Senator Mike Crapo, envisages phasing out tax credits enshrined by the Biden-era 2022 Inflation Reduction Act for solar and wind energy in 2026 by reducing the incentive to 60% of the credit's value and ending it by 2028.

It would grant 100% of the credit to hydropower, nuclear and geothermal facilities until 2033, then phase it out to zero by 2036, according to the draft.

A summary of the bill text released by Crapo said it would eliminate hundreds of billions of dollars of clean energy subsidies, which it described as unnecessary, and would support consistent energy sources over intermittent renewable energy.

Shares of U.S. solar energy companies tumbled in extended trade on Monday after the changes were unveiled.

The Senate language gives more time for clean energy projects to use the tax credits than the House version, which required that a project must start construction within 60 days of the bill's enactment and be placed in service by Dec. 31, 2028 to qualify for the tax credits. This raised concerns among some lawmakers and project proponents who said the changes threatened electricity reliability and jeopardized investments made across the country.

Since the House narrowly passed its version of Trump's budget known as the "One Big, Beautiful Bill Act" last month, some electric utility executives, lawmakers and clean energy industry groups have been pressing Senate Republicans to make the provisions related to IRA clean energy tax credits less drastic.

Senate Republican moderates, including Alaska's Lisa Murkowski and Utah's John Curtis, have been urging the Senate tax panel to give clean energy projects more time to use the credits, enable developers to continue to sell their tax credits to use funds for construction and ease restrictions on foreign ownership.

The Senate bill retains some of the restrictions called for in the House bill against the use of tax credits for projects that rely on equipment or critical minerals from foreign adversary nations like China. But under the Senate bill, some publicly traded companies using materials from China would face fewer restrictions.

The bill text also introduced a formula for calculating whether a project received "material assistance" from a foreign entity that would preclude it from being eligible for the incentives.

Clean energy industry groups had opposed those restrictions because they would severely affect projects that rely on Chinese components in their supply chains.

The Senate's version of the bill preserves project developers' ability to sell, or transfer, their tax credits to third parties to reduce financing costs. The House bill had phased out that provision.

Like the House bill, the Senate bill eliminates consumer-facing credits for installing rooftop panels and making other energy-related home improvements.

"Eliminating the tax credits that save families money is a profound mistake," Ari Matusiak, CEO of the electrification nonprofit Rewiring America, said in a statement. "They're not niche incentives - they're key tools for lowering energy bills, creating good jobs that can't be offshored or fulfilled by AI, and reducing pressure on an increasingly strained power grid."

The electric utility industry, which had flagged concerns that nearly 75 gigawatts of planned new generation capacity of renewable energy would be cancelled between 2025 and 2032 at a time of rapidly growing energy demand if the House version passed, said the Senate version made progress on key provisions including project timelines and transferability.

"These modifications are a step in the right direction," said Edison Electric Institute (EEI) interim President Pat Vincent-Collawn.

(Reporting by Valerie Volcovici and Nichola Groom; Editing by Leslie Adler, David Gregorio and Lincoln Feast.)