Installing & Configuring Cloud-Init on ISO-Built Ubuntu 22.04 VMs

Target OS : Ubuntu 22.04 LTS (installed from ISO) should also works on 20.x release
Hypervisor : Proxmox VE
Cloud-Init Ver : 25.3-0ubuntu1~22.04.1 (or later)

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1. PREREQUISITES
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- Ubuntu 22.04 VM running on Proxmox VE
- Root/sudo access inside the VM
- VM must have internet connectivity
- All commands are run INSIDE the VM (not on the Proxmox host)

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2. INSTALL CLOUD-INIT
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sudo apt update
sudo apt install cloud-init -y

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3. ENABLE CLOUD-INIT SERVICES
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sudo systemctl enable cloud-init
sudo systemctl enable cloud-init-local
sudo systemctl enable cloud-config
sudo systemctl enable cloud-final

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4. CONFIGURE CLOUD-INIT FOR PROXMOX (NoCloud DATASOURCE)
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4a. Create the Proxmox datasource config:

sudo nano /etc/cloud/cloud.cfg.d/99_proxmox.cfg

Paste the following:

--- START OF FILE ---
datasource_list: [NoCloud, None]
disable_root: false
ssh_pwauth: true
--- END OF FILE ---

4b. Create the network renderer config:

sudo nano /etc/cloud/cloud.cfg.d/99_network.cfg

Paste the following:

--- START OF FILE ---
system_info:
network:
renderers: ['netplan']
--- END OF FILE ---

!! CRITICAL WARNING !!
The renderer config MUST be under ‘system_info:’ and NOT under the top-level ‘network:’ key. Putting ‘renderers’ or ‘version’ under the top-level ‘network:’ key will cause cloud-init to treat them as actual network config, resulting in this error:

RuntimeError: Unknown network config version: None

WRONG:
network:
renderers: ['netplan']
version: 2

CORRECT:
system_info:
network:
renderers: ['netplan']

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5. REMOVE INSTALLER OVERRIDE FILES
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Ubuntu ISO installs leave files that BLOCK cloud-init from working.
Remove them:

sudo rm -f /etc/cloud/cloud.cfg.d/subiquity-disable-cloudinit-networking.cfg
sudo rm -f /etc/cloud/cloud.cfg.d/99-installer.cfg

Explanation of what each file does:

subiquity-disable-cloudinit-networking.cfg
– Contains: network: {config: disabled}
– Effect: Completely disables cloud-init network configuration

99-installer.cfg
– Contains: datasource_list: [None] plus hardcoded instance-id
– Effect: Overrides our NoCloud datasource, prevents cloud-init
from reading the Proxmox CloudInit drive
– Also sets: preserve_hostname: true, resize_rootfs: false,
growpart: mode: ‘off’ — all of which block cloud-init

The following files are SAFE to keep:
– 05_logging.cfg
– 90_dpkg.cfg
– curtin-preserve-sources.cfg
– README

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6. REMOVE OLD STATIC NETPLAN CONFIG
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!! CRITICAL STEP !!
The file /etc/netplan/00-installer-config.yaml is generated by the Ubuntu installer (subiquity) and contains hardcoded network settings. It takes priority over cloud-init’s generated config
(50-cloud-init.yaml) because ’00-‘ sorts before ’50-‘.

If NOT removed, cloud-init’s network config will NEVER take effect.

BACKUP FIRST (so you can restore network if something goes wrong):

sudo cp /etc/netplan/00-installer-config.yaml /etc/netplan/00-installer-config.yaml.bak

Then remove it:

sudo rm -f /etc/netplan/00-installer-config.yaml

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7. CLEAN MACHINE-UNIQUE IDENTIFIERS
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These must be reset so future clones get unique identities:

sudo truncate -s 0 /etc/machine-id
sudo rm -f /var/lib/dbus/machine-id
sudo ln -sf /etc/machine-id /var/lib/dbus/machine-id
sudo rm -f /etc/ssh/ssh_host_*
sudo rm -rf /var/lib/cloud/

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8. REGENERATE SSH HOST KEYS (FOR CURRENT VM)
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sudo ssh-keygen -A
sudo systemctl restart ssh

Verify keys exist:

ls -la /etc/ssh/ssh_host_*

You should see at least 3 key pairs (rsa, ecdsa, ed25519).

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9. DISABLE CLOUD-INIT ON CURRENT VM (PROTECT EXISTING CONFIG)
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sudo touch /etc/cloud/cloud-init.disabled

This prevents cloud-init from running on the CURRENT VM, preserving your existing configuration. Cloud-init remains installed and enabled for future use — it simply skips execution when this file exists.

When you later clone/template this VM, REMOVE this file so clones run cloud-init on first boot.

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10. ADD CLOUDINIT DRIVE IN PROXMOX
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On the Proxmox host web UI:

1. Select the VM in the left panel
2. Go to Hardware tab
3. Click Add → CloudInit Drive
4. Select storage (e.g., local-lvm or local)
5. Click Add

After adding, the Cloud-Init tab in the VM's menu will become active
(no longer grayed out). You can configure:
- User
- Password
- SSH public key
- DNS domain and servers
- Network (IP, gateway, netmask)

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11. REBOOT AND VERIFY (CURRENT VM)
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sudo reboot

After reboot, verify:

cloud-init status
Expected: status: disabled

systemctl status ssh
Expected: active (running)

systemctl is-enabled cloud-init
Expected: enabled

ls /etc/cloud/cloud-init.disabled
Expected: file exists

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12. TEST CLOUD-INIT (REMOVE DISABLED FILE)
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When ready to test that cloud-init works with Proxmox:

12a. Configure cloud-init settings in Proxmox GUI:
– Go to Cloud-Init tab
– Set: User, Password, SSH Key, IP, Gateway, DNS
– Click “Regenerate Image” button at the top

12b. Inside the VM, enable cloud-init:

sudo rm /etc/cloud/cloud-init.disabled
sudo cloud-init clean --logs
sudo rm -rf /var/lib/cloud/
sudo reboot

12c. After reboot, verify:

cloud-init status
Expected: status: done

ip addr show
Expected: IP matches what was set in Proxmox Cloud-Init tab

cat /etc/netplan/50-cloud-init.yaml
Expected: Contains proper netplan config with Proxmox IP,
gateway, and DNS

12d. Verify the cloud-init drive was read:

sudo mkdir -p /mnt/ci
sudo mount /dev/sr0 /mnt/ci
cat /mnt/ci/network-config
cat /mnt/ci/user-data
cat /mnt/ci/meta-data
sudo umount /mnt/ci

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13. CREATING A PROXMOX TEMPLATE (FOR FUTURE USE)
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To convert this VM into a cloneable template:

13a. Inside the VM:

sudo rm -f /etc/cloud/cloud-init.disabled
sudo cloud-init clean --logs
sudo rm -rf /var/lib/cloud/
sudo rm -f /etc/ssh/ssh_host_*
sudo truncate -s 0 /etc/machine-id
sudo shutdown -h now

13b. On the Proxmox host web UI:

– Right-click VM → Convert to template
– Select template → Hardware → Add → CloudInit Drive (if needed)
– Go to Cloud-Init tab → Configure user, password, SSH key, network
– Click “Regenerate Image”

13c. To deploy a new VM from the template:

– Right-click template → Clone
– Choose: Linked Clone or Full Clone
– Go to Cloud-Init tab → Set unique IP and hostname
– Click “Regenerate Image”
– Start the clone
– Cloud-init runs on first boot automatically

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14. TROUBLESHOOTING
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