PORTLAND (AP) — A University of Maine-led effort to build an offshore wind pilot project was dealt a significant blow Wednesday when it failed to a win a competition for a $47 million federal grant, expected to be a key source of funding.

The U.S. Department of Energy’s decision to pass over the Maine Aqua Ventus project for the grant means an uncertain future for the proposal, which would put a two turbine, 12-megawatt project off the coast of Monhegan Island, and the goal of making Maine a hub for offshore wind development.

While Maine it failed to win the grant, it will receive $3 million from the federal government under a research and development partnership. UMaine officials said they would use that grant to complete research and development on the project that will use the floating turbine technology called VolturnUS.

“The University of Maine remains enthusiastic about the opportunities from the VolturnUS technology to tap into the largest sources of renewable energy in Maine,” Jake Ward, vice president for invocation and economic development at the University of Maine, said in a statement. “The winds in the Gulf of Maine are still there. The need for economical, environmentally sustainable renewable energy that can create local and U.S. jobs is still an important goal for Maine and the United States.”

UMaine officials hope to place the $120 million pilot project 15 miles off the coast of Monhegan Island, and it’s expected to generate enough power for 7,000 homes. If successful, the goal is to build a larger wind farm generating up to 500 megawatts in the Gulf of Maine.

Maine lost to proposals in Virginia, New Jersey and Oregon. It was selected as an alternate and can resubmit if one of the winning projects fails to live up to its obligations over the next year, officials said.

Renewable energy advocates placed their hopes for building an extensive offshore wind industry in the state on the success of the Maine Aqua Ventus project after Norwegian company Statoil spiked its plans to put four three-megawatt wind turbines 12 miles off Maine’s coast in October.

Statoil’s decision followed maneuvering by Republican Gov. Paul LePage’s administration to reopen the competitive bidding process to allow UMaine to submit a bid. LePage’s administration opposed Statoil’s project because it said would have a negative impact on utility customers and lacked enough economic benefits for the state.

Maine’s congressional delegation vowed to help the project advance.

“We will continue to support the University as it seeks financing, whether through the Department of Energy or other venues, and we look forward to helping Maine maintain its lead in deep-water, offshore wind power development and innovation,” Republican Sen. Susan Collins and independent Sen. Angus King said in a statement.