The high fertilizer demand for biodiesel production from microalgae is a significant challenge facing the commercialization of this promising technology. We investigated a processing strategy called hydrothermal carbonization (HTC) to convert wet algal biomass into a lipid‐rich hydrochar and aqueous phase (AP) co‐product. By reacting biomass at 200°C for 15 min, about 50% of the algae biomass became a solid hydrochar and roughly 40–70% of the C, N, and P in the reactant material dissolved into the AP. For the first time, an AP co‐product of this nature was analyzed by HPLC, GC‐MS and FT‐ICR‐MS to identify and characterize the dissolved organic matter. Using a unique marine bi‐culture suspected to contain a green algae (Nannochloris) and a cyanobacteria (Synechocystis), we demonstrated that this AP co‐product can support biomass growth better than a medium containing only inorganic nutrients. To manage unwanted contamination and optimize AP utilization, we employed a two‐stage growth process and fed‐batch additions of the AP co‐product. The effect of media recycling and nutrient supplementation, as well as a production model for a large‐scale facility, are discussed. Our work suggests that HTC can play a critical role in making algal biorefineries more sustainable by obviating biomass drying for fuel processing and recycling nutrients. © 2013 American Institute of Chemical Engineers Environ Prog, 32: 962–975, 2013
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