On the same system (QEMU only) and same version of nova (Kilo), I can launch an instance with Libvirt 1.2.2 (included with Ubuntu 14.04) but receive this error with Libvirt 1.2.12 (included with the Kilo cloud-archive repo). Either Libvirt 1.2.12 reports the wrong capabilities to nova or nova makes some sort of incorrect assumptions with it.
On the same system (QEMU only) and same version of nova (Kilo), I can launch an instance with Libvirt 1.2.2 (included with Ubuntu 14.04) but receive this error with Libvirt 1.2.12 (included with the Kilo cloud-archive repo). Either Libvirt 1.2.12 reports the wrong capabilities to nova or nova makes some sort of incorrect assumptions with it.