Merit Order

Merit order is the practice of ranking available generators, and dispatching them, from the lowest marginal cost to the highest, so a grid operator meets demand at the lowest possible total cost at each moment. In an ordinary merit order a plant with near-zero marginal cost, such as a wind or solar farm already built, is dispatched before a plant that must buy fuel for every additional megawatt-hour, such as a gas turbine, which is why growing renewable capacity has pushed high-cost peaking plants further down the queue and toward the margin of the market they once anchored.