Merz was born at Gateshead, the eldest child of John Theodore Merz, the author of A History of European Thought in the Nineteenth Century (1896-1914).The children were brought up in the highly intellectual atmosphere of The Quarries, Benwell, in Newcastle. Owing to his mother's Quaker connection, Merz was educated at Bootham School in York, after which he studied at Armstrong College in Newcastle.
In 1893, Merz went as a pupil to the Pandon Dene generating station which had been founded by his father and his maternal uncle, Robert Spence Watson (q.v.). Future employment led to Lincoln, London and Cork, in which latter city he met William McLellan, who became his partner in 1902. The well-known firm of Merz and McLellan, consultative electrical engineers of Newcastle, and later London also, lasted until McLellan's death in 1934.
The two partners designed the Neptune Bank power station at Wallsend, which was inaugurated by Lord Kelvin in 1902. This was the first power station in Great Britain to generate 3-phase current at what was then the high voltage of 5,500. The same year, Merz was responsible for a second pioneering venture in the electrification of the Newcastle-North Shields railway line, the world's first suburban railway designed to cater for passengers only. Merz also supervised the Melbourne suburban railway system in 1912, the first of many such trips abroad. He also carried out government work during World War I.
Although he was a vice-president of the Institution of Electrical Engineers (1912-15) his dislike of public speaking led him to decline the presidency. The partners were also responsible for the Dunston power station (1933-51). It one of a chain of such installations modelled on the pattern of Battersea in London, but far in advance of all others by encasing most of its machinery in glass rather than solid brick. Pevsner describes it as a 'vast, complex, yet clean piece of machinery'.
Merz was possessed of a clear, orderly mind and was a superb expert witness before parliamentary committees. He was himself chairman of the committee whose report resulted in the 'grid' system. Sir Richard Augustus Redmayne (q.v.) states that Merz 'has some claim to be regarded in his own sphere as the principal electrical engineer of his time.'