Empirical Stress Test of the Merit‑Order Mechanism Under Extreme Price Shocks: A Unit‑Level Analysis of Coal, Lignite, and Gas Units in Poland during the European Energy Crisis

European electricity markets experienced an exceptional stress test in 2021–2023, raising renewed questions about how marginal pricing and the merit‑order mechanism perform under extreme fuel and carbon price shocks. This paper provides a unit‑level empirical assessment of these dynamics for Poland, an electricity system still dominated by coal, with a smaller but growing Combined-Cycle Gas Turbines (CCGTs) fleet and rapidly rising renewables. A transparent short‑run marginal cost (SRMC) model for all centrally dispatched hard‑coal, lignite, and gas‑fired units has been constructed and presented annual merit‑order stacks for 2021–2023. The analysis decomposes SRMC into fuel, transport (hard coal), and EU ETS (Emissions Trading System) components to attribute observed reranking to interpretable cost channels rather than aggregate price movements. The results document a clear crisis‑related reshuffling: record gas prices in 2022 pushed CCGT units markedly rightwards, while the highest‑cost tail remained anchored in the oldest hard‑coal units in all three years. A structured ±25% sensitivity analysis demonstrates robust, technology‑specific exposure profiles: SRMC is fuel‑driven for CCGT, carbon‑driven (EU-ETS) for lignite, and jointly driven by coal and EU ETS costs for hard coal. These results provide a replicable empirical basis for economically coherent phase‑out sequencing and clarify how fossil‑price shocks transmit through marginal pricing to the European electricity market. Policy implications align with the emerging European consensus: maintain marginal pricing for dispatch efficiency, while reducing exposure to fossil‑driven marginality through long‑term contracting, targeted adequacy mechanisms, and accelerated deployment of low‑carbon flexibility