The study focuses on sustainability evaluation of an algae-based energy system in Latvia with a holistic and integrated approach of multi-criteria analysis combined with life cycle assessment (including a practical side – biogas yield experiments of locally available algae). The study shows potential for sustainable use of algae in Latvian conditions and thus that algal biomass can be utilized for the production of biogas. The most sustainable and feasible scenario of using algae for biogas energy production foresees the collection of algae biomass from natural water bodies. Important beneficial effects through the use of algae are related to avoiding global warming potential (GWP) and eutrophication impacts. Biogas batch experiments carried out with the local macrophyte C.demersum have shown a methane yield of 554 l CH4/kg VS.