This thesis examines policy tensions arising from the emergence of sustainable technologies and the institutional barriers to their adoption. Its starting point is an analysis of conflict over electricity pricing between Wellington City Council and Wellington Electricity, sparked by Wellington City Council’s proposal to replace all existing street lighting with Light Emitting Diode (LED) technology. The thesis analyses key policy documents informing the position of Wellington City Council and Wellington Electricity, to identify the ideational and related institutional drivers of this conflict. The idea of holistic sustainability has been a key driver of policy at the local government level, and the idea of profitable dependable supply informs central government legislation that sets the terms of reference for Wellington Electricity. The idea of profitable dependable supply is expressed in institutions which constrain flexibility and limit policy options for addressing sustainable energy use. The intention to embrace change, shown in the concern for integration and future focus on the part of the Wellington City Council, stands in contrast to the focus and constraint of profitable dependable supply which restrains the capacity to engage with change to more efficient and effective technology. The limitations imposed by existing electricity generation and supply institutions create policy rigidity at a time when more responsive approaches to the challenges of sustainability are needed.