Merit order is how electricity grids decide which power plants run first. The cheapest sources get dispatched before expensive ones, so renewables (with near-zero marginal costs) typically go ahead of fossil fuels. The EU's Electricity Market Design and the UK's Balancing Mechanism both formalize this. More renewables on the grid pushes wholesale prices down and reduces carbon intensity.

That said, merit order only covers what physically happens on the grid. It says nothing about who gets to claim that renewable energy. For that, you need Energy Attribute Certificates . Under the GHG Protocol 's market-based Scope 2 method, companies prove renewable consumption by buying and cancelling Guarantees of Origin through registries like AIB , or through platforms such as Soldera Virtual Accounts . These certificates work independently of what's actually flowing through the wires at any given moment.

This means sustainability teams are managing two separate things at once. The grid might be running clean because of merit order effects, but your company's renewable claims still depend on having the right certificates cancelled against your actual consumption. You need both the physical dispatch story and the contractual evidence to line up, otherwise your carbon accounting has gaps.