The converted plant will have the capacity to export more than 400MW of low carbon electricity to the National Grid.
Commenting on the development, 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."
In December 2014, the UK unveiled plans to subsidise the conversion of the Lynemouth coal plant to operate on biomass.
After conversion, the plant will be capable of generating 420MW of renewable electricity from wood pellets.
The UK Government expects that the project would operate until 2027 and deliver around 2.3TWh of energy per year.
The plant require about 1.5 million tonnes of wood pellets per year, sourced mainly from the US and Canada.
The EC said it has concerns that the actual rate of return may be higher than the parties estimate and could lead to overcompensation.
The commission believes that the amount of wood pellets to be imported from overseas is considerable and subsidising it may distort competition in the biomass market.
