I have a few clients running Server 2012 using Server Backup to backup Hyper-V Clients to external hard drives.

After a few successful backups, to one drive eventually they start failing with the following: 

"Backup location is running low on space. Free up space or reduce size of data getting backed up."

From there I have to reduce space using commands like DiskShadow and WBAdmin to remove old backups. 

I thought that Server Backup overwrote old backups as disk space became and issue is this not the case, or is it a bug in the backup if so does anyone know a fix.

Hi,

Windows Server Backup will not automatically delete a previous backup if its size is larger than 1/8 of total used space. I assume it is the cause of your current situation.

It is recommended to get the backup location larger to workaround this issue.

Or you can add a schedule to delete an oldest backup after a backup performed successfully. 

Are you able to provide a sample of the Schedule, as it sounds like that might have to be the way to work around it for ourselves as the machines are backing up to external drives which are not easily expandable.

As WSB create VSS shadow copy, we can use vssadmin to delete shadow copies to reduce the size it used.

This command could help delete the oldest shadow copies. 

vssadmin delete shadows /for=x: /oldest

Note: Make sure it is performed after a successful backup or you will have less and less backups.