The staggering rate of population growth has augmented the reliance on fossil fuel utilization, and it kindled the society to explore alternative and sustainable sources of energy. In this regard, biodiesel from microalgae came to the limelight; but crucial energy-consuming and expensive processes like cultivation, harvesting, and drying make the microalgal biodiesel unsustainable and economically unfeasible. To surpass these impediments, in this research work, a low-cost box-type passive solar dryer (BTPSD) is designed and fabricated with zero energy consumption mode and compared with conventional hot air oven for drying the biomass, neutral lipids of the marine microalga Chlorella vulgaris for biodiesel application. The onset of the work, BTPSD with 2 cm thickness of glass wool as TIM (thermal insulation material), 4 cm TIM thickness and no TIM was simulated for thermal storage behaviour using ANSYS FLUENT 19.2 Computational Fluid Dynamics tool and based on the results, 4 cm TIM thickness was chosen for experimentation. The time taken by BTPSD and hot air oven to remove the moisture from algal biomass is 3 and 2 h, respectively, whereas for neutral lipids drying, it was 4 and 3.5 h, respectively. Though there is a little difference in drying time, neutral lipid and FAME content from both drying systems are tantamount, i.e., ~ 12% neutral lipid and 95% FAME. Further, the percentage of vital fatty acids identified from BTPSD and hot air oven methods are almost similar, i.e., C16:0 (23.4%), C18:1 (14.3%), C18:3 (11.42%), C18:1 (9.22%). Though the time taken for valorizing biomass and neutral lipids of C. vulgaris by BTPSD is slightly longer than hot air oven, low energy consumption and cost-effectiveness make the BTPSD a promising system to scale down the microalgal biodiesel production cost significantly.