In the cloud computing, companies usually using high-end storage systems to guarantee the efficiency of virtual machines (VM). These storage systems cost a lot of energy for their high performance. In this paper, we propose EEDS, a deduplication-based energy efficiency storage system for VM storage. We firstly investigate some VM image files with general operation systems. With the analysis result, we find there are many redundant data which bring extra energy cost in VM storage. Therefore, in EEDS, we design a two-step deduplication mechanism to reduce these redundant data without service interruption while traditional deduplication technology is used for offline backup. Since this mechanism needs CPU time which is the limited resource, we design a deduplication selection algorithm such that the storage energy consumption is minimized for a given set of VM in a cloud cluster with limited resource for deduplication. Experiment results in the para-virtualization environments with EEDS show that the energy consumption is reduced by even up to 66% with negligible performance degradation.