The internally illuminated photobioreactor (IIPBR) design has been shown to be more efficient in utilizing the incident light energy than the externally illuminated designs. This study evaluated (i) optimal sparging of the IIPBR with CO2-enriched air (CEA) to enhance biomass productivity; and, (ii) single-stage and two-stage operation of the IIPBR to enhance lipid productivity. Growth data from two algal cultures-Scenedesmus sp. and Nannochloropsis sauna, cultivated in an 18-L prototype version of the IIPBR were used to establish the optimal conditions for the two goals in terms of the energy ratio. Based on the optimized results under sparging with CEA, the energy ratio in the IIPBR in the first stage with Nannochloropsis sauna was at least 6 times higher due to optimal performance of the IIPBR at lower energy input than typical literature results for other PBR designs, whereas the energy ratios in the second stage were comparable to literature results. (C) 2013, The Society for Biotechnology, Japan. All rights reserved.