Officials at the Department for the Economy believed wind turbines “should be eligible” for coronavirus payments.
Fifty-two wind turbine owners in Northern Ireland received emergency coronavirus funding from Stormont.
The sector was subsequently ruled ineligible, after more than £500,000 was paid.
The Department of Economy said once new information came to light, “eligibility was reconsidered” to protect the public purse.
New papers obtained by the BBC Nolan Show reveal that officials “could not decide” on a way to withhold payments from owners already receiving the lucrative green energy subsidy.
The documents suggest that weeks after the initial 52 wind turbine payments were made in April, a further 328 payments were still on the table.
They suggest that the cost of the payments would have been over 10 times greater if officials from Land and Property Services (LPS) had not intervened.
On 5 May, the Department for the Economy told Land and Property Services that wind turbines should be eligible for the £10,000 Covid grants.
Keith Forster, director of the department’s strategic policy division, said: “We discussed this issue at length, and we could not decide on an approach that would enable us to meaningfully withhold payment to any business that meets the criteria of the scheme.
“On this basis, wind turbines registered as receiving small business rates relief should be eligible for the scheme.”
Ian Snowden, LPS chief executive, later warned the department that LPS had found “another 300 previously unrated properties, all of them wind turbines.”
He was concerned about a potential payment of £6.28 million for wind turbine owners. At this stage, LPS was already withholding 328 turbine payments.
In a meeting with Department for the Economy officials on 19 May, LPS raised further concerns.
Minutes of the meeting state that “many wind turbines are registered as individual limited companies, however deeper analysis of the initial assessment estimated that the maximum payments that could potentially be received by a director of multiple wind turbine companies would be between £40k- £80k”.
On 12 June, the Department for the Economy instructed LPS not to issue the payments.
Finance committee member Jim Wells MLA said the Department for the Economy initially made the wrong call on this issue.
“The Audit Office report indicated that due to the very high levels of subsidy, the owners of wind turbines did not need or deserve any form of financial aid.
“There should have been no question that they warranted Small Business Rates Relief or the coronavirus grants”.
He said payments should stop immediately, creating a “windfall” of extra money that “could be put to good use elsewhere'”.
The Department of Economy said the initial decision on wind turbines “was considered on the baseline eligibility criteria”.
A spokesperson for the department said: “Decisions were made in the context of available information and when new information came to light, decisions were made on that basis.
“Once full details came to light, in regards wind turbines, the policy position regarding eligibility was reconsidered in order to protect the public purse.”
BBC’s Nolan show also revealed that almost 2% of businesses in receipt of the small business rates relief scheme are wind turbine owners.
This cost the taxpayer £310,000 in 2020/21. Wind turbines have been receiving the rates discount since 2010, with the annual cost rising from £178,035 in 2015.
Many wind turbines in NI are already receiving “excessive’ subsidies”, according to the Audit Office.
The Department of Finance say the small business rate relief scheme for 2020/21 was approved without change by the Executive and Finance Committee.