This paper presents a fundamental study aimed at understanding energy transfer phenomenon involved in dynamics of flutter of an aeroelastic lifting surface. The study is focused on unraveling the mechanism of energy exchange that takes place between two coupled sub-systems-aero and structure, assessing qualitatively and quantitatively the characteristics of energy transfer during different phases of dynamic response. For the purpose of this study, a lifting surface having NACA 0012 airfoil is considered. A high fidelity fully coupled computational dynamic model of this configuration is developed using Ansys Workbench. The lifting surface configuration was chosen to model the physical prototype that was built for the wind tunnel testing for a Navy project for flutter studies. The computational model is built maintaining the same geometrical and modal characteristics of the physical model. Considering the computational limitations, actual 3D coupled simulation is performed on a smaller section of this model to establish the concept of energy transfer. Previous work of authors showed a 2D aeroelastic system and energy analysis involved in a single cycle of a motion as a proof of concept. This paper presents the analysis of energy transfer across boundary during stable (damped), marginally stable (LCO), and unstable (diverging) phases of the dynamic response of the coupled aeroelastic system using experimental results. Computational results are showed for a configuration where magnetostrictive material is used to harness the energy from the sustained stable oscillations. This basic understanding of energy flow in and out of structure will not only facilitate better designs of lifting surfaces for desired flutter characteristics but also give deeper insights into potential for harvesting energy extracted from flow field by structure during marginally stable and unstable phases of the motion.