Microalgae possess the potential to produce bio-oils, carbohydrates, protein, amino acids and other value added products, each of which increase its value as a crop. Unfortunately, proven systems do not yet exist for commercial scale production. System designs have generally not adequately accounted for water and energy use at scale, as well as byproduct markets, and thus yielded systems that are both unaffordable and unsustainable. We address energy and water use by presenting a straightforward microalga-to-bio-oil production process and then characterize system performance using steady-state water and energy balances. Practical limitations to commercial production of bio-oils from photosynthetic microalgae are proposed and conclusions drawn regarding system potential for assumed biomass productivities. As this is a theoretical analysis of a generic process and in practice many of the bottlenecks presented remain to be solved, it is our intent that the analysis framework presented herein can be applied to future systems that propose such solutions. (C) 2010 Elsevier Ltd. All rights reserved.