In this study, a promising microbial fuel cell (MFC) system has been developed, wherein algae is cultivated in the cathode chamber, algae biomass is harvested and lipids are extracted. The lipid extracted algal (LEA) biomass was then used as an electron donor substrate. The performance of MFCs fed with LEA biomass was compared with that of fruit waste fed MFCs (FP-MFCs), wherein LEA-fed MFC was superior in all aspects. Power density of 2.7 W m(-3) was obtained by LEA-fed MFCs which is 145% and 260% higher than FP MFC and control MFC respectively. The volumetric algae productivity of 0.028 kg m(-3) day(-1) in cathode chamber was achieved. The system was able to generate 0.0136 kWh Kg(-1) COD day(-1) of electric energy and 0.0782 kWh m(-3) day(-1) of algal oil energy. The proposed system is a net energy producer which does not rely heavily on the external supply of electron donor substrates.