The increasing energy consumption has become a major concern in cloud computing due to its cost and environmental damage. Virtual Machine placement algorithms have been proven to be very effective in increasing energy efficiency and thus reducing the costs. In this paper we have introduced a new priority routing VM placement algorithm and have compared it with PABFD (power-aware best fit decreasing) on CoMon dataset using CloudSim for simulation. Our experiments show the superiority of our new method with regards to energy consumption and level of SLA violations measures and prove that priority routing VM placement algorithm can be effectively utilized to increase energy efficiency in the clouds.