To configure data Encryption at rest, Azure offers below two solutions : 
  • Storage Service Encryption: This is enabled by default and cannot be disabled.
  • Azure Disk Encryption : This is not enabled by default, but can be enabled on Windows and Linux Azure VMs.
In this article, we will explore Azure Windows VM Disk Encryption. We will use PowerShell for Disk Encryption. 

For the rest of the article, we will refer Azure Disk Encryption by its acronym ADE.

Important Points

  • ADE is not available on Basic, A-series VMs, or on virtual machines with a less than 2 GB of memory.
  • There's no additional charge associated with encrypting VM disks with Azure Disk Encryption, but there are charges associated with the use of Azure Key Vault. For more details, refer Key Vault Pricing.
  • For Windows VMs, ADE uses Bitlocker for Windows to encrypt OS and Data volumes. 
  • To store Encryption Keys and secrets , ADE uses Azure Key Vault.
  • When you enable ADE on an Windows VM, the ADE Extension is deployed on the Azure VM, and you can check the status in the VM Extension section.
  • For Windows VMs, the OS Disk must be encrypted before enabling encryption on Data Disks.
  • In order to encrypt a Data Disk, it must first be mounted with the VM. It is recommended that you initialize and format the disk within the OS, before you try to encrypt the data disk.
  • Once you encrypt the OS volume, disabling encryption on the OS volume isn't supported.
  • For Windows 2012 / Windows 10 OS (>=1511) , the Encryption Method which is used is XTS-AES 256 bit.


Before we try to encrypt Azure Windows VM Disk, it is important to know prerequisites. 

1) Latest PowerShell with AZ Module : Since we will perform entire activity using PowerShell, please verify that latest PowerShell module is available in your base system, along with Azure AZ module installed. 

2) Azure Key Vault : You can create a new Key Vault, or configure an existing one to use for Azure Disk Encryption. The Key Vault and Azure VMs must be in the same regions, to enable disk encryption. 
In our lab, we have created a new Key Vault in East US2 region, because our VMs are in this region. 

3) Key Vault Access Policy : 

a) Add your ID to Access Policy : Before performing any operation on the Key Vault, it is important that your account is added in Key Vault Access Policy. In this case, we have configured Create, Import, delete and List Access Policies in our Key Vault. 

Set-AzKeyVaultAccessPolicy-VaultName'<Key Vault Name>'-UserPrincipalName<Azure AD UPN>'-PermissionsToKeyscreate,import,delete,list-PassThru 

b) Enable Access to Azure Disk Encryption.

This is required, so that Azure Platform can access the Key Vault to retrieve the encryption key, and same it available for Azure VMs. Use below PowerShell command. 

Set-AzKeyVaultAccessPolicy -VaultName "<your-unique-keyvault-name>" -ResourceGroupName "MyResourceGroup" –EnabledForDiskEncryption

Once you configure above two steps, you can see below Access Policies configured in Key Vault.

4) Ensure Azure VM can reach Azure Key Vault Endpoint and Azure Active Directory Endpoint. For more details on Network Configuration, please refer this page

5) Azure Disk Encryption will fail if domain level group policy blocks the AES-CBC algorithm, which is used by BitLocker. For more details on Group Policy requirement, please refer this page.

Create Encryption Key

Before you encrypt Azure VMs, you first need to create the encryption key and store in the Key Vault. Following command does that: 

Add-AzKeyVaultKey - VaultName <KeyVaultName> -Name <EncryptionKeyName> -Destination "Software"

Here, the value of Destination parameter is Software, which means the Key will be software protected. To create a HSM protected Key, the Destination parameter value will be HSM

If you now check the portal, you will see that the Disk Encryption Key has been created in Key Vault.

Create an Azure VM

We have created a new Azure VM in our lab, with Windows Server 2016 Datacenter Edition. Both Key Vault and Azure VM are in the same region. 
The Azure VM has two disks, one OS Disk and one Data Disk. None of the disks are currently encrypted.

Make sure the data disk is mounted and formatted before you encrypt data disk. 

Also, check disk encryption status from the Operating System. Run manage-bde –status command to check that.

Enable Disk Encryption

Now that we have set the access policies and created the encryption key , let’s proceed with enabling disk encryption.

Use this script to enable Disk Encryption. Change parameters before you run this script.

Validate Disk Encryption Status

There are several ways to ensure that volumes have been encrypted.

1) Azure PowerShell :

Check the Disk Encryption Status using the command Get-AzVMDiskEncryptionStatus

2) Azure Portal :

Note: Sometimes Data Disk encryption status shows as Not Enabled in the portal, even if it is enabled. In that case, validate the disk encryption status using PowerShell and within the OS. To reflect the data disk encryption status Enabled in the portal, you might need to stop and start the Azure VM.

3) OS Command Line

You can also validate the Disk Encryption Status within the OS, using manage-bde –status command.

4) Disk Management

You can also see the encryption status from the Disk management console. All encrypted volumes will be displayed as “BitLocker Encrypted”.

Data Disk Encryption

As mentioned before, you need to first encrypt OS Disk in Azure Windows VM, if you want to encrypt data disks.

For Azure Windows VM, it is not possible to encrypt data disk, without encrypting OS Disk. However, it is possible for Linux VMs. 

The command Set-AzVMDiskEncryptionExtension has a parameter named –VolumeType. This parameter has below options : 

  • Omitted : If VolumeType parameter is omitted while running the command, both OS and Data volumes will be encrypted . Any data disk which will be added later to this VM will also be encrypted.
  • OS: If VolumeType attribute is set to OS, only OS volume will be encrypted.
  • All: Same as omitting the parameter, which covers all volumes. However, in our lab, this option did not encrypt data disk. So we recommend not to use the All option.
  • Data: Encrypts only data volume. This option is not applicable for Windows VMs.
If you want to encrypt OS volume and all data volumes, do not specify –VolumeType parameter while running the command Set-AzVMDiskEncryptionExtension.

If you add a new disk in an encrypted VM, you have to initialize and format the new volume to enable encryption. You do not need to enable encryption, as it is already encrypted for data disk. You can use manage-bde –status within the OS, to ensure that the new disk is encrypted. 

However, to correctly reflect the encryption status for the new disk in Azure Portal, you may need to stop and start the Azure VM.

Backing up Encrypted VMs

Azure Backup Supports backing up Windows and Linux Azure VMs, which are encrypted using Azure Disk Encryption.

However, there are few limitations associated with backing up and restoring encrypted VMs, which are mentioned here. So when you design your backup solution for encrypted VMs, you have to consider these limitations.

Some of the notable limitations are :

1) Backup and Restoration of Azure Encrypted VMs would work within the same subscription and region. The Recovery Services Vault must reside on the same subscription and region.

2) File/Folder level restoration is not possible for encrypted VMs, only disk level restoration is supported. This is true for both Windows and Linux VMs.

In order to backup and restore encrypted VMs, Azure Backup Management Service needs access to the Key Vault. Follow this link to know, how to do that.

For more details on this topic, please refer this article.

Disaster Recovery of Encrypted VMs

Microsoft has published an article, where it has mentioned all the points which need to be considered while enabling ASR Replication for encrypted Azure VMs.

To facilitate replication for encrypted VMs, the encryption key(s) needs to be present within the DR Key Vault.

If the user (who is enabling VM replication) have required access, Site Recovery creates a Key Vault in  DR region when replication is enabled, and copies the encryption key from primary key vault to DR key vault.

However, if the user (who is enabling VM replication) does not have key vault access, then the Key Vault admin can copy the encryption key to DR Key Vault using a script which Microsoft has provided.

See Also

If you find this article useful, please visit my other articles here.