Microalgae are a promising feedstock for bioenergy due to higher productivity, flexible growing conditions, and high lipid/polysaccharide content compared to terrestrial biomass. Microalgae can be converted to biogas through anaerobic digestion (AD). AD is a mature technology with a high energy return on energy invested. Microalgae AD can bypass energy intensive dewatering operations that are associated with liquid fuel production from algae. A techno-economic assessment of the commercial feasibility of algae-based biogas production was conducted using Cyanothece BG0011 biomass as an example. BG0011 is a naturally occurring, saline cyanobacterium isolated from Florida Keys. It fixes atmospheric nitrogen and produces exopolysaccharide (EPS). Maximum cell density and EPS concentration of 2.7 and 2.1 g afdw 1 /L (for total algae biomass concentration of 4.8 g afdw/L) were obtained by air sparging. For an areal cell and EPS productivity of 12.4 and 9.6 g afdw/m2/day, respectively, the biomethane production cost was 14.8 $/MMBtu using covered anaerobic lagoon and high-pressure water scrubbing for biogas purification. Electricity production from biogas costs 13 cents/kwh. If areal productivity was increased by 33% from the same system, by sparging air enriched with 1% CO2, then biomethane cost was reduced to 12.16 $/MMBtu and electricity cost to 11 cents/kwh.