Fire them out to the Z buffer and let that worry about it.
If you find that in the future it is too slow (via profiling obviously) then look at optimizing it.
Take the simplest solution and move on.
Your method fails if you have two sprites occupying the same box in the grid. Suppose you have two enemies both standing in the same box. One stands slightly in front of the other. Which do you draw first? You would need two algorithms - one which divides the sprites into the grid, and the second which looks at the z co-ordinates of all the sprites in a given grid box and draws them based on that value.
A far simpler method is to have a single collection of all sprites. It should store all sprites sorted by their z co-ordinates (from the back of the screen at the head of the list to the front of the screen at the back). Loop through the collection and draw each sprite as it appears. When a sprite moves into or out of the screen (ie. its z co-ordinate changes) you can perform a very simple sort to move that single sprite within the collection. Keep swapping it with the next sprite in the list until the next sprite's z co-ordinate is greater than/less than (as appropriate) the changed sprite's co-ordinate.