The UK earlier planned to convert the Lynemouth coal-fired power plant to operate only on wood pallets in order to generate and export over 400MW of low carbon electricity to the national grid.
As part of the investigation, the Commission will ensure that the public funds used to support the project are limited as per the requirement and do not result in overcompensation.
Additionally, the EC will evaluate whether the project’s positive effects in achieving EU energy and environmental objectives offset potential competition distortions in the biomass market.
REA External Affairs head James Court said: "We understand this is a routine part of the State Aid process and while there will be a delay, we believe the Commission will recognise the significant benefits biomass power can bring to the UK’s energy mix.
"Biomass power can deliver the most cost-competitive low-carbon baseload power and the UK needs more of it if we are to hit our 2020 targets in the most effective way for energy consumers."
