Volatile fatty acids (VFAs) derived from organic waste, were used as a low cost carbon source for high bioreactor productivity and titer. A multi-stage continuous high cell density culture (MSC-HCDC) process was employed for economic assessment of microbial lipids for biodiesel production. In a simulation study we used a lipid yield of 0.3 g/g-VFAs, cell mass yield of 0.5 g/g-glucose or wood hydrolyzates, and employed process variables including lipid contents from 10-90% of cell mass, bioreactor productivity of 0.5-48 g/L/h, and plant capacity of 20 000-1 000 000 metric ton (MT)/year. A production cost of USD 1.048/kg-lipid was predicted with raw material costs of USD 0.2/kg for wood hydrolyzates and USD 0.15/kg for VFAs; 9 g/L/h bioreactor productivity; 100,000 MT/year production capacity; and 75% lipids content. The variables having the highest impact on microbial lipid production costs were the cost of VFAs and lipid yield, followed by lipid content, fermenter cost, and lipid productivity. The cost of raw materials accounted for 66.25% of total operating costs. This study shows that biodiesel from microbial lipids has the potential to become competitive with diesels from other sources.