Configuring an EC2 Instance as a NAT for Private Subnet EC2 – A Cost-Optimized Alternative to NAT Gateway

In AWS, providing internet access to EC2 instances in private subnets is a common requirement for secure architectures. While AWS offers the managed NAT Gateway service for this purpose, it comes with a cost—approximately $32/month per gateway plus data transfer fees. For small-scale projects, startups, or cost-conscious developers, this can add up quickly. Fortunately, you can configure an EC2 instance as a NAT to achieve the same functionality at a fraction of the cost. In this article, we’ll walk through the setup process, highlight cost-saving benefits, and compare it to the native NAT Gateway service.

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Why Use an EC2 Instance as a NAT?

A Network Address Translation (NAT) device allows instances in a private subnet to access the internet (e.g., for software updates or API calls) without exposing them to inbound traffic. The AWS NAT Gateway is a fully managed, highly available solution, but its pricing—$0.045/hour (around $32/month) plus $0.045/GB of data processed—may not suit every budget.

By contrast, a small EC2 instance (e.g., t2.micro or t3.nano) can serve as a NAT, costing as little as $0/month (under the AWS Free Tier) or $3–$7/month otherwise. This approach trades some management overhead for significant savings, making it ideal for development environments, low-traffic workloads, or cost-optimization experiments.

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Prerequisites

Before diving in, ensure you have:

• A VPC with a public subnet (e.g., 10.0.0.0/24) and a private subnet (e.g., 10.0.1.0/24).
• An Internet Gateway attached to the VPC.
• An EC2 instance in the private subnet needing internet access.
• An SSH key pair for instance management.

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Step-by-Step Configuration

Here’s how to set up an EC2 instance as a NAT using Ubuntu 24.04 LTS in the public subnet:

1. Launch the NAT EC2 Instance

• AMI: Choose Ubuntu Server 24.04 LTS (or Amazon Linux 2023 for a lightweight alternative).
• Instance Type: Opt for t3.nano ($0.0052/hour) or t2.micro ($0.0104/hour). The t2.micro is free for 750 hours/month under the AWS Free Tier.
• Network: Place it in the public subnet and enable “Auto-assign Public IP.”
• Security Group:
  • Inbound: Allow SSH (port 22) from your IP and all traffic from the private subnet CIDR (e.g., 10.0.1.0/24).
  • Outbound: Allow all traffic (0.0.0.0/0).

2. Disable Source/Destination Checks

• In the AWS EC2 console, select the NAT instance.
• Go to Actions > Networking > Change Source/Destination Check and disable it. This allows the instance to route traffic not destined for itself.

3. Configure IP Forwarding and NAT

SSH into the NAT instance (ssh -i your-key.pem ubuntu@<public-ip>) and run these commands:


# Update the system
sudo apt update && sudo apt upgrade -y

# Enable IP forwarding
sudo sysctl -w net.ipv4.ip_forward=1
echo "net.ipv4.ip_forward=1" | sudo tee -a /etc/sysctl.conf

# Configure NAT (replace 'enX0' with your interface from 'ip link')
sudo iptables -t nat -A POSTROUTING -s 10.0.1.0/24 -o enX0 -j MASQUERADE

# Save rules
sudo iptables-save | sudo tee /etc/iptables/rules.v4


• Check your interface name with ip link (e.g., enX0 or ens5) and replace it in the NAT rule.

4. Update the Private Subnet Route Table

• In the VPC console, go to Route Tables.
• Edit the route table for the private subnet (e.g., 10.0.1.0/24).
• Add a route:
  • Destination: 0.0.0.0/0
  • Target: Select the NAT EC2 instance (by instance ID, e.g., i-xxxxxxx).

5. Test the Setup

• Access the private subnet EC2 (e.g., via a bastion host or AWS Systems Manager Session Manager).
• Run: bashCollapseWrapCopyping 8.8.8.8 If you get responses, the NAT instance is successfully routing traffic to the internet.

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Cost Comparison: EC2 NAT vs. NAT Gateway

Option	Cost per Month	Pros	Cons
NAT Gateway	~$32 + $0.045/GB processed	Managed, highly available	Expensive for low traffic
t2.micro NAT	$0 (Free Tier) or ~$7	Free or low cost, customizable	Manual setup, single point of failure
t3.nano NAT	~$3.80	Cheapest paid option, sufficient for light use	Limited capacity, manual management

• Savings Example: For a private subnet transferring 10 GB/month:
  • NAT Gateway: $32 + (10 × $0.045) = $32.45
  • t2.micro: $0 (Free Tier) or $7.60
  • t3.nano: $3.80
  • Savings: Up to 88% with t3.nano!

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NAT Gateway vs. EC2 NAT: When to Choose What?

• Use NAT Gateway:
  • Production workloads needing high availability and zero maintenance.
  • Heavy traffic (e.g., >100 GB/month), where EC2 scaling becomes complex.
• Use EC2 NAT:
  • Development, testing, or low-traffic environments.
  • Budget-conscious projects leveraging the Free Tier.
  • Scenarios requiring custom NAT rules or monitoring.

For a highly available EC2 NAT, you could deploy it in an Auto Scaling Group (min. 1 instance) to recover from failures, though this adds slight complexity.

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Best Practices for EC2 NAT

• Monitor Health: Use CloudWatch to track instance status and reboot if needed.
• Optimize Placement: Place the NAT instance and private subnet in the same Availability Zone to avoid inter-AZ data transfer costs ($0.01/GB).
• Secure It: Limit security group rules to essential traffic only.
• CIDR Planning: Ensure your VPC CIDR (e.g., 10.0.0.0/16) and subnets (e.g., 10.0.0.0/24, 10.0.1.0/24) don’t overlap with other VPCs or on-premises networks.

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Conclusion

Configuring an EC2 instance as a NAT is a practical, cost-effective alternative to the AWS NAT Gateway. With a t2.micro or t3.nano, you can slash networking costs by 80–100% while meeting the needs of private subnet instances. Though it requires manual setup and lacks the native service’s redundancy, it’s a perfect fit for budget-conscious AWS users. Try it out in your next project, and let me know your experience in the comments!