Algal-bacteria high-rate ponds represent an energy-efficient wastewater treatment approach and a source for affordable and sustainable biomass feedstock for production of renewable energy through anaerobic digestion (AD). However, there is still a need for more data on wastewater treatment efficiency, biomass productivity and settleability from outdoor treatment facilities, as well as on impact of variability in biomass composition and digestibility on methane yield and energy output. Hydraulic retention time (HRT) and wastewater quality fed into 30 m2 raceway ponds had a major effect on algal-bacteria polyculture productivity, settleability, phylogenetic and biochemical compositions, digestibility and methane yield. While Micractinium, Scenedesmus, Chlorella, and pennate diatoms were always among the key species observed, the gross productivity and 2-hour settleability during summer cultivation varied in the first-stage ponds treating primary wastewater from 29 ± 5 to 54 ± 12 gAFDW/m2/d and from 88 ± 8 to 94 ± 4% for HRT of 3 and 2 days, respectively. For these conditions, the effluent had csBOD of 3.4 or 3.3 mg/L and Ntotal (mostly NO3−-N) of 9.2 or 8.2 mg/L, respectively. The second-stage algal ponds (HRT 3 days) showed lower productivity of 16 ± 6 gAFDW/m2/d, settleability of 84 ± 11%, and effluent csBOD 3.7 mg/L and Ntotal 0.8 mg/L. Biomass composition from different ponds was 34–38% protein, 18–28% total lipids and 6–14% FAME. The methane yield varied about 30% with largest value of 0.34 ± 0.01 L/gVS and showed a positive correlation with biomass lipid content (R2 = 0.93). First-order and pseudo-parallel first-order rate kinetic models exhibited a better fit for methane production (most R2 > 0.993) than the modified Gompertz model. The variation in biomass composition led to significant differences in energy output (varied by about 60%), Net Energy Ratios (ranged from 1.6 to 2.2) and Net Energy Efficiency (from 60% to 70%) when projecting the energy balance for a large-scale continuous AD process with an optimal HRT of 20–30 days.