A green energy scheme was overly generous and had people rushing to sign up before officials shut it down, a report concludes today.
Financial returns from the Northern Ireland Renewable Obligation scheme (NIRO) exceeded those in Great Britain.
The scheme provided subsidies to encourage investment in renewable generation, but closed to onshore wind in 2016 and other technologies the following year.
The rate of return from wind turbines was running at over 20% for some, with applicants receiving a payback on their investment in just four years.
Applications had surged before the scheme closed, auditors found.
Modelling used by the former Department of Enterprise, Trade and Investment - the same department criticised over the RHI scandal - meant support for generating stations using biogas was also higher than necessary.
Wind turbines and anaerobic digester (AD) plants, which produce biogas, were mainly small-scale and designed to draw the top level of income from the scheme.
Legislation effectively incentivised smaller operations over larger, more cost-effective wind farms and plants.
Northern Ireland now has, proportionately, three times the number of standalone wind turbines and AD plants than GB.
The findings come in a report published today by the Northern Ireland Audit Office.
SDLP MLA Sinead McLaughlin said it was "worrying reading".
"We see that investors have made in some cases excessive profits, the cost of which has been borne by electricity prices that were too high. This has been a complaint of business for several years," she said.
"While the objective of achieving a higher proportion of renewable sources for electricity is laudable, the mechanism for doing this was badly flawed."
Green leader Clare Bailey said: "Public trust and confidence in green energy schemes took a hammering during the RHI scandal - we don't need an energy scheme misconstrued as green and raising new concerns with over-generous incentives."
The NIRO scheme was established in 2005 and mirrored other Renewable Obligation schemes in GB.
Its primary objective was to increase the proportion of electricity consumption generated from renewable sources.
Support was based on market rates paid by electricity suppliers to those who produced it.
Under the scheme, which is not funded by taxation, Renewable Obligation Certificates (ROCs) are issued for each unit of electricity generated, and are sold to electricity suppliers throughout the UK.
Suppliers use these to demonstrate compliance with obligations around renewable sources.
Today's report forecasts the total maximum cost to all UK suppliers of purchasing certificates generated in Northern Ireland over a 32-year period will be £5bn. This includes £1.25bn as the forecasted cost to all Northern Ireland suppliers.
Ultimately the cost of certificates is passed on to consumers through electricity bills.
Comptroller and Auditor General Kieran Donnelly said: "This report does not criticise the use of renewable sources as a means of electricity generation as this undoubtedly produces significant benefits for the environment and society as a whole.
"However, I have found a number of strategic shortcomings in the design of the NIRO.
"This report has been published at a time of significantly reduced public confidence in renewable energy schemes.
"It is crucial that the recommendations I have made here are followed up, and lessons learned to ensure future schemes are more robust and efficient."
The NIRO scheme achieved its aim of promoting investment in, and the generation of, renewable electricity. A target for 40% of electricity consumed to be generated from renewable sources was exceeded, ahead of schedule, in 2019.
However, auditors identified "a significant risk" that some investors may be achieving a higher return than necessary.
Until 2011, Northern Ireland's strategic approach and level of financial support was broadly in line with GB, but it then diverged.
It led to higher levels of support here for investors in small-scale wind, from 2014 until closure in June 2016, and AD plants, from 2011/12 until closure in 2017.
The report states: "Despite lower costs passed on to NI consumers, we have found that, for small-scale wind and AD-based generating stations (which generate approximately 17% of renewable electricity), returns to those renewables suppliers since 2014 can be significantly higher than in GB."
Northern Ireland has 1,282 wind generating stations - 94% are small-scale standalone turbines. Auditors found there are three times the number of small-scale standalone turbines per square kilometre here than GB.
Before the scheme closed, there was a rush to sign up as investors capitalised on higher levels of financial support.
The report adds: "The number of smaller, standalone wind turbine based generating stations increased significantly in the last few years of the NIRO.
"We believe that this is as a result of the higher level of financial support available to these generating stations since 2014, as well as a surge to gain accreditation prior to scheme closure."
The potential rate of return could be in excess of 20%, with a payback on the original investment of less than four years.
The report states that wind farms, with multiple turbines, have not generated the same level of public concern.
Auditors also examined AD plants, which break down organic matter to produce biogas, which can then be used to generate electricity by a NIRO accredited generating station.
As with wind energy, the report found that most generating stations using biogas from AD plants - 91 out of 110 - were small-scale.
It states these were "designed with the potential of achieving the maximum level of income from the NIRO". Modelling used by Deti to set the level of support could be providing higher returns than necessary.
This model assumed that any AD-based generating stations would be made up of a wide range of generating outputs.
In reality, most investors commissioned AD plants with a generating capacity at the maximum permissible level of the band, to achieve the highest available financial return.
The Economy Department told auditors that while some generators accredited under the NIRO will realise higher returns than the rate considered as typical, others will realise lower. That was particularly relevant in the case of AD plants.
The report highlights a lack of joined-up thinking between departments and agencies, which resulted in environmental and planning risks not being identified and managed.
There is no requirement in the NIRO legislation for investors and operators of these types of renewable technology to comply with planning and environmental regulations. A significant number of wind turbines and AD plants that either did not have planning permission, or had not complied with planning restrictions, were identified.
The report finds that the NIRO legislation was vague and non-specific in relation to permitted uses of electricity not exported to the grid.
It recommends that any future renewables legislation should only provide financial support for generating off-grid renewable electricity where it was clearly being used to replace electricity that would otherwise come from fossil fuel sources.
Auditors identified a large number of wind and AD-based generating stations that had not been identified for a rates assessment. As a result, an additional £2m of annual rates has been recovered by Land and Property Services.
Allegations of 'phantom AD plants' - where certificates were issued to stations that did not exist - were not substantiated.
However, an investigation by Ofgem identified a potential issue of 'gaming', where two small generating stations had been set up in close proximity and were able to claim a higher number of certificates.
Ofgem concluded that both should have been accredited as a single station and were reclassified.