Five regions of Ethiopia were identified as potential sites for algal biomass cultivation considering both sunlight and local climatic conditions. The meteorological data, sunlight and air temperature information for the identified potential sites were used as a basis to estimate annual biomass production, lipid production and carbon sequestration potential. An average upper biomass, oil yield and carbon fixation potential was calculated to be 315 T/ha/yr, 111,202.4 L/ha/yr. and 89 TCO2/ha/yr. This study provides a baseline data for theoretical estimates of open pond microalgae production systems in Ethiopia. This study will support the Ethiopian government in its Energy and Food Security policy to promote the use of indigenous and renewable sources for transportation fuels and income generation.