GOVERNMENT backing for a huge windfarm of up to 277 turbines off the coast of Scotland has been warmly welcomed by the industry and politicians.

The Department of Energy said the development by Beatrice Offshore Windfarm Ltd off the coast of Caithness was one of eight major renewable energy projects across the UK to be given Contracts For Difference, the new mechanism for delivering subsidy.

It will come into force next month, meaning the development can be properly funded.

A neighbouring development is being pursued by Moray Offshore Renewables Limited, which is also expected to apply for a contract later this year. Both projects were given planning permission by the Scottish Government last month.

If both go ahead they would represent the world's third largest offshore windfarm, with up to 326 turbines,

They could generate electricity for more than a million homes and mean work for up to 4600 people during the construction phase and 580 once in operation.

Energy Secretary Edward Davey said: "These contracts for major renewable electricity projects mark a new stage in Britain's green energy investment boom. By themselves they will bring green jobs and growth across the UK, but they are a significant part of our efforts to give Britain cleaner and more secure energy."

Beatrice Offshore Windfarm Ltd is a partnership between SSE Renewables and Repsol Nuevas Energias UK.

Finlay McCutcheon, SSE's director of offshore renewables, said: "We are extremely pleased with today's announcement."