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Steven Pottinger, a director of Baillie Wind Farm Ltd, also disputed that the financial spin-offs amount to compensation.

Speaking on the opening day of a public local inquiry, Mr Pottinger did acknowledge that some "stakeholders" living near the turbines would experience above normal levels of noise.

Mr Pottinger, a solicitor, and his brother Tom Pottinger, a Caithness farmer, are spearheading the £80 million venture.

Norwegian utility Statkraft has a 30 per cent stake in their firm which is seeking planning consent to erect 21 turbines at Bardnaheigh Farm, near Westfield.

The scheme was unanimously rejected by Highland Council's Far North planning committee in January last year.

Members claimed the 110-metre high turbines would have an unacceptable impact on residents, the landscape and tourism.

They also heeded unresolved concerns by the RSPB about the risks of protected birds colliding with turbines and by Historic Scotland about the impact on nearby chambered cairns.

The developers yesterday set out to convince principal inquiry reporter David Russell that he should recommend that ministers give the green light.

Steven Pottinger said the land was first recognised as a prime site for a wind farm 15 years ago.

Baillie Wind Farm Ltd was formed in 2004 and has evolved into a syndicate of private investors.

It has recently secured the backing of Statkraft, which is the largest renewable energy generator in Europe. Mr Pottinger said the scheme has been significantly revised and moved westwards, largely in response to concerns over the impact of the turbines on wintering geese, and added that the firm has been keen to consult fully with local residents.

He said that of the eight dwellings closest to the turbines, six are occupied by individuals who have financial stakes in the operation.

A seventh is in support of the plans and the other has not objected.

John Campbell QC, representing the Highland Council and West Caithness Action Group, was keen to explore the financial tie-ups with local residents.

Mr Pottinger said the agreements have been negotiated individually and have to remain confidential.

He said: "The people have a financial interest in the project if it goes ahead. Stakeholders may subject themselves to a higher level of noise."

Mr Campbell asked: "To put it rather crudely, what you're doing is buying off objections which might come your way if noise levels were as predicted for those houses?"

Mr Pottinger replied: "I don't like the way you put that.

"From the outset, we consulted with people living nearby and they decided that they wanted to become involved."

Mr Campbell continued: "The purpose of stakeholder agreements is to give a financial agreement of whatever kind so that they can be subjected to greater levels of noise than would otherwise be the case?"

Mr Pottinger: "That would be correct."

He said this did not apply to the visual impact of the turbines.

Asked if he would describe the arrangements as compensation payments, Mr Pottinger replied: "I'm not sure if compensation is the correct word.

"It's an annual payment to people who are happy to join in our scheme. I wouldn't call it compensation.

"Compensation is normally paid for damage caused – that is not how we see it."

Mr Russell asked: "Would the payments not be on the basis of the residents being subject to noise in excess of the norm?"

Mr Pottinger: "Yes for some, but others who wouldn't be subjected to higher noise wanted to get involved."

Baillie Wind Farm Ltd claims the 63-megawatt development would save 70,000 tonnes of carbon and generate enough electricity to power 35,000 households.

It also envisages the wind farm would be worth £20 million to local businesses, and create 30 jobs during its construction and three or four engineering jobs during its 25-year operation.

The firm has also signalled its intent to operate a community fund potentially worth £100,000 a year.

Caithness civic leader Councillor David Bremner yesterday defended the decision of the local planning authority.

Addressing the inquiry, he said: "Caithness is a county quite unique within the Highland region given the flat, open nature of its landscape.

"This gives rise to beautiful, panoramic views, big skies and a sense of place.

"This is enriched by an abundance of natural life and historic monuments which characterise the landscape."

Mr Bremner said this designation applies to the site of the wind farm under consideration.

He said the scheme runs counter to the local planning blueprint and the Highland renewable energy strategy. It would have a significantly adverse impact on the visual amenity of the area and on local tourism.

The inquiry in Thurso's Royal Hotel, which continues today, is due to end with a site visit on March 27.

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