The European Commission has launched an investigation into the UK government's approval of a £1bn gas-fired power station in Pembrokeshire following complaints by environmental campaigners.
RWE npower's 2GW Pembroke power station opened last month and is thought to be the largest of its type in Europe, capable of powering 3.5 million homes.
But a complaint by Friends of the Earth Cymru to Brussels has resulted in officials this week writing to the Department of Energy and Climate Change (DECC) asking it to clarify the impact of the power plant on surrounding coastal water.
Friends of the Earth Cymru says the power station's cooling system will waste energy by dumping water that is eight degrees warmer than the surrounding water into the highly protected Milford Haven, potentially killing millions of fish and other marine species every year.
The group is also arguing that the energy wasted by the system is equivalent to 40 per cent of Wales' electricity demand.
Gareth Clubb, director of Friends of the Earth Cymru, wrote to the Commission in July 2010 alleging the system breached EU laws and since then an investigation has been running on whether the Environment Agency should have issued an operating permit.
"Time and time again we have pointed out that the UK government acted unlawfully in allowing this technology to be used in Wales, which isn't considered good enough in the US or in England," Clubb said in a statement today.
"Industry can exist alongside Pembrokeshire's magnificent wildlife and the tourism it supports, and jobs can be created without this devastating cost to our environment. But we must use the best technology and the highest standards to make sure this coastline is given the protection it deserves."
A DECC spokesman told BusinessGreen the Commission had issued a "notice of infringement" rather than a full infraction proceeding.
He said the department now has two months to reply to the Commission's letter and is "currently considering our response".
Should the Commission not be satisfied by the government's response, it could open infringement proceedings that could then eventually lead to the UK being dragged before the European Court of Justice.
A RWE npower spokeswoman told BusinessGreen the proceedings "are a matter for the government and European Commission, so we are not going to comment at this time".