The electricity output from microbial fuel cell (MFC) with a microalgae assisted cathode is usually higher than that with an air cathode. The output of electricity from a photosynthetic microalgae MFC was positively correlated with the dissolved oxygen (DO) level in the microalgae assisted biocathode. However, DO is highly affected by the photosynthesis of microalgae, leading to the low stability in the electricity output that easily varies with the change in microalgae growth. In this study, to improve the electricity output stability of the MFC, a partially submerged carbon cloth cathode electrode was first investigated to use oxygen from both microalgae and air, with synthetic piggery wastewater used as the anolyte and anaerobically digested swine wastewater as the catholyte. When the DO levels dropped from 13.6–14.8 to 1.0–1.6 mg/L, the working voltages in the MFCs with partially submerged electrodes remained high (256–239 mV), whereas that for the conventional completely submerged electrodes dropped from 259 to 102 mV. The working voltages (average, 297 ± 26 mV) of the MFCs with the 50% submerged electrodes were significantly (p < 0.05) higher than with other partially or completely submerged electrodes. The associated maximum lipid production from wastewater was 250 ± 42 mg/L with lipid content of 41 ± 6% dry biomass. Although the partially submerged electrode had no significant effects on lipid production or nitrogen removal in wastewater, there was significant improvement in the stability of the electricity generated under variable conditions.