BackgroundRenewable energy for sustainable development is a subject of a worldwide debate since continuous utilization of non-renewable energy sources has a drastic impact on the environment and economy; a search for alternative energy resources is indispensable. Microalgae are promising and potential alternate energy resources for biodiesel production. Thus, our efforts were focused on surveying the natural diversity of microalgae for the production of biodiesel. The present study aimed at identification, isolation, and characterization of oleaginous microalgae from shola forests of Nilgiri Biosphere Reserve (NBR), the biodiversity hot spot of India, where the microalgal diversity has not yet been systematically investigated.ResultsOverall the higher biomass yield, higher lipid accumulation and thermotolerance observed in the isolated microalgal strains have been found to be the desirable traits for the efficient biodiesel production. Species composition and diversity analysis yielded ten potential microalgal isolates belonging to Chlorophyceae and Cyanophyceae classes. The chlorophytes exhibited higher growth rate, maximum biomass yield, and higher lipid accumulation than Cyanophyceae. Among the chlorophytes, the best performing strains were identified and represented by Acutodesmus dissociatus (TGA1), Chlorella sp. (TGA2), Chlamydomonadales sp. (TGA3) and Hindakia tetrachotoma (PGA1). The Chlamydomonadales sp. recorded with the highest growth rate, lipid accumulation and biomass yield of 0.28 ± 0.03 day−1 (μexp), 29.7 ± 0.69% and 134.17 ± 16.87 mg L−1 day−1, respectively. It was also found to grow well at various temperatures, viz., 25 °C, 35 °C, and 45 °C, indicating its suitability for open pond cultivation. The fatty acid methyl ester (FAME) analysis of stationary phase cultures of selected four algal strains by tandem mass spectrograph showed C16:0, C18:1 and C18:3 as dominant fatty acids suitable for biodiesel production. All the three strains except for Hindakia tetrachotoma (PGA1) recorded higher carbohydrate content and were considered as potential feed stocks for biodiesel production through hydrothermal liquefaction technology (HTL).ConclusionsIn conclusion, the present investigation is a first systematic study on the microalgal diversity of soil and water samples from selected sites of NBR. The study resulted in isolation and characterization of ten potent oleaginous microalgae and found four cultures as promising feed stocks for biodiesel production. Of the four microalgae, Chlamydomonadales sp. (TGA3) was found to be significantly thermo-tolerant and can be considered as promising feedstock for biodiesel production.Electronic supplementary materialThe online version of this article (10.1186/s12866-017-1144-x) contains supplementary material, which is available to authorized users.