In this study, an upper limit in the solar energy conversion efficiency which can be translated to a maximum potential algal yield of a large-scale culture is calculated based on the algal productivity model in which light and nutrient are made the growth rate limiting factors, and taking the design characteristics of the cultivation system into account. Our results indicate that for the production of low-cost biodiesel within the limits of the wastewater quality standards, that the culturing of high lipid content algae within a raceway pond would provide an appropriate solution for manufacturing biodiesel from algae. However, due to inefficient sunlight utilization and due to the large amount of fertilizer required in raceway ponds, a greater effluent recycle rate would have to be implemented to reduce the amount of fertilizer discharge to meet the wastewater quality standards and to maximize the attainable productivity of algal biomass. © 2012 Elsevier Ltd.