Algae (singular alga) are a diverse group of plant-like aquatic organisms. Oceanic algae is often referred to as phytoplancton. These simple organisms use photosynthesis to grab energy which allows them to make carbohydrates, oils and proteins. These in turn can be processed to become a biofuel. Biofuel is any fuel made from living things, or the waste products of living things (like fecal matter or urine). The algae oils can be converted to biodiesel and the remaining material can be used to create bioethanol. There is a growing market for techniques in algae biofuel production, since it is a low life-cycle carbon emitting fuel.
Algae grown for the energy sector is also referred to as microalgae. While there are other important distinctions in biology, generally, the microalgae grown for its energy is algae that is too small to make out individual organisms without a microscope, hence the name.
Below is a video from the U.S. Department of energy on algae based biofuels.
To learn more about phytoplankton please NOAA's website.