We investigated the effect of power dissipation on microwave-accelerated simultaneous extraction and transesterification of dry algal biomass (Nannochloropsis salina) to biodiesel. The response surface methodology (RSM) was applied to design the experiments and optimize the process parameters, including dry algae to methanol ratio, reaction time and catalyst concentrations, by evaluating their influences on the fatty acid methyl ester yield (FAME) under controlled microwave power conditions. The microwave energy utilization efficiency was estimated at various power levels to optimize the power dissipation, maximize FAME yields and minimize energy losses. The algal biomass characterization and algal biodiesel analysis were performed using various analytical instruments such as FTIR, SEM-EDS, TGA and GC-MS. The Nile Red method was applied for lipid localization in microalgae cells using confocal microscopy and fluorescence spectroscopy. The direct conversion technique has the potential to provide energy-efficient and economical routes for biodiesel production from algal biomass.