In rotary ultrasonic machining, contactless energy transfer (CET) converts power from an ultrasonic power supply to the ultrasonic transducers. Two-side compensation circuits improve the efficiency of this process, but the addition of secondary compensation causes problems such as dynamic imbalance. Load changes affect the performance of CET system (CETS) with compensation, and dynamic compensation is needed for good CETS performance, such as high transfer efficiency and output power. This article investigates the frequency characteristics of CETS without compensation under different loads. The effects of two-side compensation on CETS under load variations is studied for the dynamic compensation characteristic. The comparison of mathematical model and performance of CETS with dynamic compensation are investigated to propose the optimized dynamic compensation. The model of CETS with optimized dynamic compensation under load variations is developed. The CETS frequency characteristics with optimized dynamic compensation are studied. The experimental results basically agree with the calculated results. The CETS with optimized dynamic compensation at the series resonant frequency can produce high transfer efficiency, high output power, low input impedance range under load variations in the cutting process of RUM, and solves the problems caused by the secondary side compensation.