The authorities trustees approved a list of 11 solar projects, totalling 122.1MW, to begin PPA negotiations with.
Developer Deepwater Wind submitted an application with LIPA in response to a 280MW request for proposals (RFP) issued in 2013.
The authority received 38 proposals and evaluted each project's operational flexibility, environmental impacts, interaction with the authority's other power supply resources, and the ability to be developed on time.
Deepwater Wind CEO Jeffrey Grybowski said, "We remain confident that our Deepwater One project will supply northeast states with clean energy in the near future.
"While we are disappointed in today's decision, we continue to advance the project."
The 210MW project is the first phase of a planned 1GW offshore project, located to the northeast of Long Island and to the south of Rhode Island and Massachusetts.
In November, Deepwater Wind agreed a deal with two unions to supply workers for the project.
In July 2013, the US Bureau of Ocean Energy Management (BOEM) handed Deepwater the lease to develop the project.
Deepwater is also developing the 30MW Block Island demonstration project. Construction of this development - also between Long Island and Rhode Island - is due to start next year.