This is not necessarily the way that algae are going to be optimally grown. I used the idea of a weeping algae to overcome one of the harvesting problems - there are ways of harvesting, but I wanted to write a story that was relatively short and uncomplicated, and so invented this method to make the lipid separation easier. There are however validated ways of increasing algal yield, I just need to go through the conversion process to see where the gain is achieved, there are at least two different possibilities and so either I or that mythical student will have to do a little more homework.

It's okay, I understand that for the purposes of the story it doesn't matter, you were going for "major breakthrough" and you got it. I am really not trying to make your life difficult with excessive critiquing of what was an excellent summary of the path from conception to meaningful impact, this is just a side-thread about the nature of the "theoretical" limit.

BTW, I just looked into the albedo issue. It is a major one.

http://www.atmosphere.mpg.de/enid/3rv.html

At a rough guess water will accept *maybe* 1 kwh/day/m^2 in the arizona sun. The sun crosses the sky at 15 degrees per hour and a mere 5 degree incident angle drops the absorbed light to 50%. So you'd get 40 minutes at above 50%, then another 40 minutes at 35-50%, 80 minutes at 13-35%...

I recall that if you do not chlorinate pools and hot tubs in Arizona, they will soon become filled with yellow-green algae. Am not sure if you could keep a pure algae strain in a pond as other species might quickly infiltrate and compete against higher lipid algae.

In some Florida offshore areas nitrogen from onshore was entering shallow water via rivers and streams. This caused algae bloom. The algae shaded out the sea grass that was the habitat of shrimp and numerous species of fish. It also depleted oxygen from the water. The growth rate of algae might be limited by nutrients and available oxygen.

These early algae models were not very efficient in their predictions of labor, energy, harvesting & processing costs, plant and equipment prices, land rent or mortgage costs, other borrowing costs, taxes etc.

With subsidies the California solar industry is growing quickly. One may need to compare the amount of energy provided per dollar between all types of renewable energies including wind, solar, hydroelectric, tidal, geothermal, and biomass. Some wind and hydroelectric projects were advancing without subsidies. A few geothermal projects were profitable without subsidies. Solar preheating of water before it entered water heater tanks has proved to be economical in areas not too far north.

With ethanol there has been some success in Brazil, yet it is causing the loss of forest habitat and creating greenhouse gas that was not properly considered by those promoting ethanol. In the United States it was calculated that to meet govt. ethanol standards forty percent of the grain (corn + wheat) might be required. Such a rapid increase in acreage of corn planted is not happening in 2008. Other nations' biofuels programs might also lead to grain deficits and spiking food prices. Grain prices tripled since 2005 when ethanol use became mandatory.

Food price increases cannot all be attributed to rising energy costs, else the price of homes, cars, clothes, electricity, etc. might have tripled.

Here is one system which would seem to minimise problems of contamination as the algae is kept in contained units:
http://www.cnn.com/2008/TECH/science/04/01/algae.oil/index.html
Algae: 'The ultimate in renewable energy' - CNN.com

They also claim far higher rates of production per acre, due to growing the algae in vertical containers.

With ethanol there has been some success in Brazil, yet it is causing the loss of forest habitat and creating greenhouse gas that was not properly considered by those promoting ethanol.

There are many reasons that forest habitat is being lost in Brazil, ethanol production from sugarcane is NOT a major contributing factor to this particular problem.
Massive monoculture of any sort does indeed have major effects on other ecosystems in Brazil and is most certainly not a completely benign influence. However it would give your otherwise excellent points a lot more credibility of you and others checked your facts and stopped propagating this myth. You can get a good overview of where and what kind of habitat is suitable for sugarcane production in Brazil by looking at the maps in this pdf file.
http://www.biofuelsnow.com/Ethanol%20From%20Sugar%20Cane.pdf

As for

creating greenhouse gas that was not properly considered by those promoting ethanol.

Neither were any of consequences of using fossil fuel and building a global economy based on a single non renewable energy source, which sort of makes the consequences of using ethanol in Brazil pale in comparison.

Ride a Bike or take a Hike!