Increased demand for energy worldwide has resulted in increasing interest in alternative renewable sources of biofuels. Demand for improved systems of bioenergy generation, environmental remediation, and coproduction of high value bioactive compounds has led to the potential use of algae in biomass utilization. In Malaysia, palm oil industries generate high amount of solid wastes. Palm Oil Mill Effluent (POME) is estimated to be three times of the amount of crude palm oil produced. POME is a heavily polluting wastewater due to its high chemical oxygen demand (COD), high biochemical oxygen demand (BOD), and high contents of minerals such as nitrogen and phosphorus that can cause severe pollution to the environment and water resources. A combination of wastewater treatment and renewable bioenergy co-generation with recovery of high-value biochemicals would benefit the palm oil industry. © 2016, The Korean Society for Biotechnology and Bioengineering and Springer-Verlag Berlin Heidelberg.