Algae cultivation

Algae can produce up to 300 times more oil per unit area than conventional crops such as rapeseed, palms, soybeans, or jatropha. As algae have a harvesting cycle of 1–10 days, their cultivation permits several harvests in a very short time-frame, a strategy differing from that associated with yearly crops (Chisti 2007).
Algae can grow on land unsuitable for other established crops, for instance: arid land, land with excessively saline soil, and drought-stricken land. This minimizes the issue of taking away pieces of land from the cultivation of food crops (Schenk et al. 2008). Algae can grow 20 to 30 times faster than food crops.

Photobioreactors.

Most companies pursuing algae as a source of biofuel pump nutrient-rich water through plastic or borosilicate glass tubes (called “bioreactors” ) that are exposed to sunlight (and so-called photobioreactors or PBR).
Running a PBR is more difficult than using an open pond, and more costly, but may provide a higher level of control and productivity.
Algae farms can also operate on marginal lands, such as in desert areas where the groundwater is saline, rather than utilizing fresh water. Algae can also grow on the surface of the ocean.
Because algae strains with lower lipid content may grow as much as 30 times faster than those with high lipid content,  the challenges in efficient biodiesel production from algae lie in finding an algal strain with a combination of high lipid-content and fast growth-rate, not too difficult to harvest; and with a cost-effective cultivation system (i.e., type of photobioreactor) best suited to that strain. There is also a need to provide concentrated CO2 to increase the rate of production.

Closed-loop system

The lack of equipment and structures needed to begin growing algae in large quantities has inhibited widespread mass-production of algae for biofuel production. Maximum use of existing agriculture processes and hardware is the goal.
Closed systems (not exposed to open air) avoid the problem of contamination by other organisms blown in by the air. The problem for a closed system is finding a cheap source of sterile CO2. Several experimenters have found the CO2 from a smokestack works well for growing algae. For reasons of economy, some experts think that algae farming for biofuels will have to be done as part of cogeneration, where it can make use of waste heat and help soak up pollution.

Open pond

Open-pond systems for the most part have been given up for the cultivation of algae with high-oil content. Many  believe that a major flaw of the Aquatic Species Program was the decision to focus their efforts exclusively on open-ponds; this makes the entire effort dependent upon the hardiness of the strain chosen, requiring it to be unnecessarily resilient in order to withstand wide swings in temperature and pH, and competition from invasive algae and bacteria. Open systems using a monoculture are also vulnerable to viral infection. The energy that a high-oil strain invests into the production of oil is energy that is not invested into the production of proteins or carbohydrates, usually resulting in the species being less hardy, or having a slower growth rate. Algal species with a lower oil content, not having to divert their energies away from growth, have an easier time in the harsher conditions of an open system.